Medicare Eligible
Covered Persons
A series of federal laws collectively referred to as the
"Medicare Secondary Payor" (MSP) laws regulate the
manner in which employers may offer group health care
coverage to Medicare eligible employees, spouses, and in some
cases, dependent children.
In order to assist the Benefits Management Office in complying with MSP laws, it is very important that you promptly and accurately complete any requests for information from the Benefits Office regarding the Medicare eligibility of you, your spouse and covered dependents. See the Important Numbers and Web Sites section of this handbook.
In addition, if you, your spouse or covered dependent child becomes eligible for Medicare, or has Medicare eligibility terminated or changed, please contact the Benefits Management Office to ensure that our records accurately reflect the correct Medicare status of the covered individual.
If you, your spouse or covered dependent child, is eligible for Medicare due to End Stage Renal Disease (ESRD), the Benefits Office needs to know the date of Medicare eligibility and any changes in Medicare eligibility. The Benefits Management Office will keep track of the 30-month period during which the City's Plan is primary.
The statutory requirements and rules for MSP coverage may vary depending on the basis for Medicare and employer group health plan coverage.
1. If you (or your covered spouse or dependent) have end stage renal disease (ESRD), Medicare pays secondary during the first 30 months of coverage. It does not matter whether you (or the dependent) are covered by an HMO, PPO or POS plan.
2. If you are currently working and are over the age of 65, Medicare pays secondary to your active City of Chicago Medical Plan, whether it is an HMO, PPO or POS plan.
In fact, if you (or a covered dependent) wish to have Medicare pay as primary, the City cannot offer you secondary coverage. If you wish to elect to have Medicare as your primary health coverage, you must notify the City of your decision and the City will cancel your coverage as an active employee or as a covered dependent.
3. If you are under 65 and currently working and you are covering a spouse who is over 65 and who has Medicare, Medicare is secondary to the City of Chicago Medical Plan, whether it is an HMO, PPO or POS plan.
If your spouse is also working and is covered by other insurance, that Plan would be the primary plan, the City plan would coordinate with the primary plan and Medicare would pay after the combined payments of the other two plans.
In fact, if your covered dependent wishes to have Medicare pay as primary, the City cannot offer your dependent secondary coverage. If your covered dependent wishes to elect to have Medicare as his or her primary health coverage, you must notify the City of that decision and the City will cancel coverage for your covered dependent.
4. In the case of disabled individuals under 65, Medicare is secondary if you are covered under your own or a family member's health care plan due to current employment. In most instances, if you or a covered dependent wish to have Medicare pay as primary, the City cannot offer you secondary coverage.
If you wish to elect to have Medicare as your primary health coverage, you must notify the City of your decision and the City will cancel your coverage as an active employee or as a covered dependent.
It is important that you/your spouse or dependent child, use your City plan active employee coverage as the primary plan and Medicare as the secondary plan. If you elect one of the City's plan as the primary coverage for you or your eligible dependent who is also eligible for Medicare, be sure to use the plan you select according to Plan guidelines.
For example, if you select an HMO, you must follow the HMO guidelines in order to receive the benefits of the Plan. If you are in an HMO and go out of network, Medicare will not assume primary payment responsibility for these bills and you may become personally liable in such cases.
If the covered individual who has Medicare decides to elect Medicare as the primary insurance, a City Plan cannot cover that individual. The City will assume the City plan is primary unless you notify the Benefits Management Office that you or your spouse or dependent child has elected Medicare as the primary coverage. The City is prohibited by law from providing secondary coverage in the case of such an election.
Example: Bill has Medicare coverage because of permanent kidney failure (end stage renal disease). He has HMO coverage through the City of Chicago as the dependent of an active employee, his wife, Sue. His HMO will be his primary payer for the first 30 months after Bill becomes eligible for or entitled to Medicare.
After 30 months, Medicare becomes the primary payer. Bill must follow the rules of the HMO and regulations of the HMO to ensure coverage and keep the HMO abreast of his Medicare eligibility so that they can process claims correctly.
Example: Mary is over 65 and is an active employee. She is eligible for Medicare. Mary is enrolled in the City's PPO Plan.
She must use her PPO Plan coverage as her primary coverage. This means, for example, that if she is hospitalized, she must tell the hospital that the City PPO Plan is her primary coverage and Medicare is her secondary coverage. The hospital will then submit the claims to the PPO Plan first, and then to Medicare.
If Mary wishes to have Medicare be her primary coverage, she must notify the City of her decision. When the City receives Mary's election to have Medicare be primary, her coverage as an active employee will be terminated. The City cannot offer her supplemental coverage.
Medicare aggressively pursues collection of any claim it paid as primary when the claim should have been secondary. You can assist the Plan by following the aforementioned guidelines.
November 2002