Medicare Isn’t Always the First Payer—And That Can Lead to Surprising Bills

Key Takeaways

• Medicare may not always pay first. The order of payment depends on your other health coverage and current life situation.

• Failing to understand who the primary payer is can lead to unexpected medical bills and delays in coverage.

Why Primary Payer Rules Matter

When you’re enrolled in Medicare, it’s easy to assume that it covers all your healthcare costs first. However, Medicare acts as either the primary or secondary payer depending on your circumstances. If you’re not clear on which payer comes first, you could be left footing the bill or dealing with denied claims.

Understanding when Medicare is the first payer versus when it takes a secondary role is critical. It impacts how your claims are processed, what you’re responsible for paying, and even whether your provider gets paid at all.

When Medicare Pays First

Medicare is the primary payer in these common situations:

• You have no other health insurance: If Medicare is your only coverage, it pays first.

• You have retiree coverage: When you have health insurance through a former employer (not current employment), Medicare generally pays first.

• You’re covered under COBRA: Medicare pays first if you have COBRA coverage because COBRA is considered secondary.

• You’re age 65 or older and working for a small employer: If your employer has fewer than 20 employees, Medicare usually pays first.

• You have Medicaid: Medicare pays first, and Medicaid picks up some or all remaining costs as the payer of last resort.

When Medicare Pays Second

Medicare acts as the secondary payer in several other situations:

• You’re still working and covered by a large employer group plan: If the employer has 20 or more employees and you’re age 65 or older, your group health plan pays first.

• You’re under 65 and have Medicare due to disability, and you’re covered by a large employer plan: If your or your spouse’s employer has 100 or more employees, the group plan pays first.

• You’re injured in an accident with liability or no-fault insurance involved: That insurance must pay before Medicare steps in.

• You’re eligible for workers’ compensation or black lung benefits: These programs must pay before Medicare does.

What Happens If the Payer Order Is Wrong

Incorrect payer order can delay claim processing or result in unexpected bills. For example:

• Medicare may reject claims it believes should have been billed to another insurer first.

• You might receive bills directly from providers if they aren’t paid properly.

• If a provider is unaware Medicare is secondary, they might not submit the claim to the correct insurer.

That’s why it’s essential to ensure the Medicare Benefits Coordination & Recovery Center (BCRC) has your correct insurance information. You can call them at 1-855-798-2627 to verify or update your coverage details.

How to Tell Who Pays First

Figuring out the payer order depends on your specific situation. Here’s what to consider:

• Are you working or retired?

• Do you have coverage through a spouse’s employer?

• What’s the size of the employer sponsoring the plan?

• Is your other coverage active or temporary, such as COBRA?

• Is your current medical treatment related to a liability claim or work injury?

The answers to these questions help determine the correct order of benefits.

Medicare and Employer Coverage

In 2025, many people age 65 and older continue working. If you’re one of them and have employer coverage, Medicare may not pay first. If your employer has 20 or more employees, their group plan is primary.

If you choose to delay Medicare Part B due to active employer coverage, that’s acceptable under these rules. However, if your employer has fewer than 20 employees and you don’t enroll in Part B, you may be left without any primary insurance—because Medicare would be expected to pay first, and you haven’t enrolled.

Always double-check employer size and how your plan coordinates with Medicare.

Special Rules for Disability and ESRD

Medicare beneficiaries under 65 with disabilities or end-stage renal disease (ESRD) face different coordination rules:

• Disability with large employer coverage: If the group plan is from an employer with 100 or more employees, that plan pays first.

• ESRD with group coverage: The employer plan pays first for the first 30 months of Medicare eligibility due to ESRD. After that, Medicare becomes the primary payer.

These rules override general coordination policies and have clear timelines.

What About TRICARE and VA Benefits?

If you’re eligible for TRICARE or Veterans Affairs (VA) benefits, Medicare doesn’t always work in the traditional primary/secondary format:

• TRICARE For Life: Medicare pays first, then TRICARE covers the rest.

• VA benefits: VA and Medicare do not coordinate. If you go to a VA facility, Medicare will not pay. If you go to a non-VA provider, VA benefits will not apply.

You must choose providers carefully if you have both VA and Medicare coverage.

Why Coordination of Benefits Matters in 2025

With rising healthcare costs and complex coverage options, it’s more important than ever to understand how your plans interact. In 2025, the average Medicare Part B premium is $185, and misunderstanding payer order could lead to hundreds—or even thousands—of dollars in denied claims or out-of-pocket costs.

Missteps can also affect:

• Timely access to care

• Prescription drug coverage

• Billing and reimbursement cycles

• Coverage for high-cost procedures like hospital stays or surgeries

Steps to Avoid Coverage Mistakes

To protect yourself from coverage mishaps:

• Confirm payer order whenever your life situation changes (job status, coverage type, employer size).

• Update Medicare and your other insurance—report any new coverage or termination.

• Ask your provider if they know who your primary insurance is and whether they’ve submitted claims to the correct one.

• Save your Explanation of Benefits (EOBs) to track what has been paid and what hasn’t.

• Call the BCRC at 1-855-798-2627 for verification if you’re unsure.

Surprising Billing Scenarios to Watch For

Here are common scenarios where you might unexpectedly get billed:

• You’re on COBRA and think it pays first: It doesn’t. Medicare does.

• You’re retired with an employer health plan: It’s secondary to Medicare.

• You had an injury but forgot to report a liability claim: Medicare won’t pay until the other insurer does.

• You assumed a provider knew Medicare was secondary: If they billed Medicare first, it may be denied.

Each of these examples reflects a misalignment between what you assume and what Medicare rules dictate.

Medicare Coordination Needs Constant Attention

Medicare is a powerful tool, but only when it’s used correctly in coordination with other insurance. When it pays first, the claims process is relatively straightforward. But when it’s secondary, the system requires careful management.

Stay proactive:

• Keep all insurance info current.

• Know the size of your employer or your spouse’s employer.

• Ask questions during medical visits about billing practices.

Mistakes in coordination can take weeks or months to resolve and may require appeals or additional paperwork.

Understanding Coordination Could Save You Thousands

Many Medicare beneficiaries assume that the system works behind the scenes without their involvement. In truth, much of the burden of ensuring correct payment order falls on you. With the average cost of a hospital stay running into thousands of dollars, failing to coordinate properly could lead to large out-of-pocket costs.

Speak with a licensed agent listed on this website if you’re unsure about how your coverage works, especially after retirement, job changes, or new health needs.