Given that health care can be one of the biggest expenses a person faces as he or she ages, it’s important to understand how Medicare factors into those costs and how it may coordinate with other health insurance benefits. Many current and retired federal employees as well as military veterans have other insurance coverage in place alongside Medicare.
When more than one coverage exists, there are “coordination of benefits” (COB) rules that govern who pays first or second. Under the COB, one insurance becomes the primary payer, and the other insurance becomes the secondary payer. The primary payer will pay what it owes on your medical bills first, and then the secondary payer will contribute after that.
This article addresses “Who pays first” when it comes to medical expenses covered by both Medicare and other health plans that federal employees commonly use.
1.) Medicare & FEHB
When you’re an active federal employee, your Federal Employees Health Benefits (FEHB) plan is the primary payer and Medicare is the secondary payer. FEHB also pays first when you’re under 65 and have Medicare because of disability if you or your spouse’s FEHB coverage is based on active employment. The primary payer also defaults to FEHB during the first 30 months of Medicare entitlement due to end-stage kidney failure regardless of employment status. Once you retire from the federal government, Medicare pays first and FEHB pays second.
If you enroll in Medicare, your FEHB premiums will not be reduced. Retirees pay the same FEHB premium as active employees. However, when you enroll in both programs, some FEHB plans offer rebates for Medicare Part B premiums and cost sharing benefits that help cover deductibles, copayments, and coinsurance.
2.) Medicare & TRICARE
TRICARE is the health care program that serves uniformed service members, retirees, and their families. If you have Medicare, you automatically receive TRICARE benefits under TRICARE For Life (TFL).
In most cases, Medicare is the primary payer for any covered services and TRICARE pays last. You will typically have no out-of-pocket costs for services covered by both Medicare and TRICARE. In some circumstances, TFL may pay for services that Medicare does not cover such as care received overseas or at a military hospital. You will be responsible to pay the costs of services that neither program covers.
3.) Medicare & VA Benefits
If you’re entitled to both Medicare and Veteran’s benefits, you can get services under either program. Since VA health care is not considered a health insurance plan, the two programs are mostly independent of each other and only work together on seldom occasions.
When you have both Medicare and VA benefits, neither health program acts as the primary or secondary payer. Instead, you will choose which benefits to use each time you visit a doctor or receive treatment. If you desire to use your VA benefits, you must seek care from a VA facility or have the VA approve services at a non-VA location.
Who Pays First?
As a recap, here are the key points to remember:
• FEHB pays first if you’re still employed as a federal worker
• Medicare pays first if you’re retired from federal service
• Medicare pays first if you have TRICARE for Life
• Neither Medicare nor VA benefits pay first; rather you choose what coverage to use at the time of service.
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