What Is Medicare Overlap?
Medicare overlap occurs when a person has both Medicare and other health insurance. They both both cover the same medical expenses. But the plans don’t each pay the full amount of benefits. One plan will pay first and the other plan will be secondary. Who pays first in an overlap depends on the kind of health insurance you have, if any.
Group Health Insurance
If you have group health insurance because you are currently employed or you are covered under your spouse’s current employment then you have a Medicare overlap. If that employer has more than 20 employees, then the group insurance pays the medical expenses first. Any remaining expenses can be turned in Medicare for secondary payment. If the employer has fewer than 20 employees then Medicare generally pays first.
If you currently employed and are offered group health insurance and reject the coverage then Medicare is unaffected. There is no Medicare overlap so Medicare will pay for any covered medical expenses. If you are a retiree you and eligible for group health insurance you should check with your plan administrator, usually human resources, to see what the effect will be if you choose or reject the coverage. In some cases, if you are eligible for Medicare and you don’t enroll for it then you retiree group health plan might not cover your medical expenses.
A Medigap insurance plan is not the same as regular insurance. It is not a Medicare overlap policy. The intent of a Medigap plan is to cover the gaps in Medicare such as the out of pocket expenses of deductibles and coinsurance amounts.
You may also have a Medicare overlap plan if you have Medicare because you are disabled but are covered under a spouse’s group health insurance due to their current employment. In this type of overlap Medicare pays first, as long as there are less than 100 employees. If there are more than 100 employees then Medicare is the secondary payor.