Understand the Relationship between Medicare and Employer-Sponsored Health Coverage

Medicare benefits start at age 65, but many people continue working past that age, either by choice or by necessity.  It is important to understand how Medicare and employer health coverage work together.  Depending upon one’s circumstances, Medicare is either the primary or secondary insurer.  The primary insurer pays any medical bills first, up to the limits of its coverage.  The secondary payer covers costs which the primary insurer does not cover (although it may not cover all costs).

Knowing whether Medicare is primary or secondary to your current coverage is crucial because it determines whether you need to sign up for Medicare part B when you first become eligible.  If Medicare is the primary insurer and you fail to enroll for Part B, your eventual Medicare Part B premium could start going up by ten percent for each 12 month period that you were eligible for Medicare Part B, but did not sign up for it.

If your employer or spouse’s employer has 20 or more employees, your employer’s insurance will be the primary insurer and Medicare will be the secondary payer.  If your employer or your spouse’s employer has fewer than 20 employees, Medicare will be the primary insurer and your employer’s insurance will be the secondary insurer.  If you are retired and still covered by your employer’s group health insurance plan, Medicare pays first and your former employer’s plan pays second. 

If you receive both Social Security Disability Insurance and Medicare and your employer has 100 or more employees, your employer’s insurance is the primary insurer.  Some employers are part of a multi-employer plan and if at least one employer in that plan has 20 employees or more, the employer’s insurance pays first.  If you receive Social Security Disability and Medicare and your employer has fewer than 100 employees, Medicare will pay first.

If you have end stage renal disease (ESRD) and are in the first 30 months of Medicare coverage of ESRD, your employer’s plan pays first.  After the first 30 months, Medicare becomes the primary insurer.  It does not matter how many employees your employer has.

If you are self-employed and have a group health plan that covers yourself and at least one other person, Medicare pays first.  Note that if you are self-employed, you may be able to deduct Medicare premiums from your income taxes by including the premiums in the self-employed health insurance deduction.

If your employer’s insurance is the primary insurer, the employer must offer you and your spouse the same coverage that it offers to younger employees.  It also cannot deny you coverage, cancel your coverage once you become eligible for Medicare, or charge you higher premiums, deductibles or copays.

The rules relating to the interplay between Medicare and employer-sponsored health insurance programs are complex.  It is important to know the rules that apply to your particular situation.


Ronald A. Fatoullah, Esq. is the principal of Ronald Fatoullah & Associates, a law firm that concentrates in elder law, estate planning, Medicaid planning, guardianships, estate administration, trusts, wills, and real estate. Stacey Meshnick, Esq. is a senior staff attorney at the firm who also supervises the firm’s Medicaid department.. The law firm can be reached at 718-261-1700, 516-466-4422, or toll free at 1-877-ELDER-LAW or 1-877-ESTATES.  Mr. Fatoullah is also a partner advisor with Advice Period, a wealth management firm, and he can be reached at 424-256-7273.