If you and/or your spouse works, you become eligible for Medicare and you are offered health coverage through your employer, you have 3 choices:
- Delay enrollment in Medicare Parts B and D, and use your employer coverage.
- Choose both Medicare and the employer’s Group Health Plan (GHP) or Large Group Health Plan (LGHP).
- Decline the employer’s plan, enroll in Medicare and supplement your insurance in other ways. See our sections on Medigap, Medicare Advantage plans, and Medi-Cal and Medicare Savings Programs for people with low income.
Topics on this page
1. Choosing Both Medicare & Your Employer Plan: Types of Plans
If you choose to have both Medicare and an employer Group Health Plan (GHP) or Large Group Health Plan (LGHP), the employer plan will usually act as your primary insurer and pay first; Medicare will usually be your secondary insurer and pay some of the cost sharing from your employer plan. You will need written documentation from the employer plan of any expenses you are responsible for paying, and then you or the provider will need to bill the Medicare Secondary Payer program for those amounts. Note: Different rules, responsibilities and choices apply to COBRA coverage if you have Medicare. For more information, see COBRA & CalCOBRA Insurance.
There are 4 main types of employer-sponsored GHPs: 2 are fee-for-service plans and 2 are managed care plans.
Fee-For-Service Employer-Sponsored GHPs & LGHPs
Two of the most common types of employer plans are fee-for-service GHPs and LGHPs. If you belong to one of these plans, you will receive a statement after your claim is processed showing what the plan paid.
If you are covered by Medicare and a GHP or LGHP, the employer plan pays first, then Medicare will process your claim. If you or your provider bills Medicare for secondary benefits, you will receive a Medicare Summary Notice (MSN) showing what Medicare paid. To avoid delays in reimbursement, be sure your doctor and other providers send your bills to the employer plan before Medicare. When submitting bills to Medicare, providers must include the appropriate documentation of what the plan paid. Your Medicare claim will not be processed without a notice showing the amount paid by the employer plan.
Employer-Sponsored Health Maintenance Organizations (HMOs) & Preferred Provider Organizations (PPOs)
Two other common types of employer plans are Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). If your employer’s GHP or LGHP is with an HMO or PPO, Medicare may not need to provide much secondary coverage.
If you go outside an HMO network for a service that is covered by the HMO, Medicare will not pay for that service. However, Medicare will generally pay if you see providers for Medicare-covered services that are not covered by the HMO.
If you go outside a PPO network for services not covered by the PPO, Medicare may pay a small amount, but not as much as it would pay if you received care inside the network. Check with the benefits administrator of your plan about coverage before receiving care outside your plan’s network.
In both of these situations, Medicare will pay benefits under the rules of the HMO or PPO for all of the GHP’s covered services.
2. Opting Out of an Employer Plan
If you have Medicare, you can decline your employer’s GHP or LGHP. This could save you money if you are required to pay a high premium for an employer plan that has benefits comparable to Medicare’s plan, or if you have benefits through previous employment such as a retiree plan, or through your spouse’s employer.
The health benefits of a GHP or LGHP for active employees should not be confused with retiree plans, which cover former employees who are no longer actively employed and/or their spouses. For more information, see Retiree Plans.