Disabled Medicare Participants
The Coordination of Benefits Contractor (“COBC”) for Centers for Medicare and Medicaid Services (CMS) is responsible for determining when Medicare becomes the primary payer of benefits for disabled participants. The current employment status of either the disabled Medicare participant or a member of the participant’s family will determine if Medicare will be primary or secondary under a group health plan.
Since disabled Medicare participants are usually not engaged in active work, CMS has established guidelines for use in determining whether coverage under a group health plan is by virtue of the employee’s or dependent’s “current employment status” for purposes of the primary/secondary payer rules.
Generally, an employee will be considered to have “current employment status” (and Medicare will be secondary payer) if:
- The employee is actively working as an employee, or is the employer (including a self-employed person), or is associated with the employer in a business relationship; or
- The employee is not actively working and is receiving disability payments from the employer that are subject to FICA tax, or would be subject to FICA tax were the employer not exempt from such tax under the Internal Revenue Code (the first six months of disability benefits are subject to FICA tax); or
- If the employee is not actively working but all of the following are true:
- The employee retains employment rights in the industry (e.g., is furloughed, temporarily laid off or on sick leave; is a teacher or seasonal worker who does not work year-round);
- The employee has not had their employment terminated by the employer;
- The employee has not been receiving disability benefits from an employer for more than six months; and
- The employee is not receiving Social Security disability benefits
If an employee does not meet the conditions required to have “current employment status,” then Medicare is primary on the basis of disability.
When a participant enrolls in Medicare due to ESRD and is receiving dialysis treatment, Medicare coverage will not begin until the fourth month of treatment. When a participant has group health plan coverage, there is a period of time when their group health plan will pay first on their health care bills and Medicare will pay second. This period of time is called a 30-month coordination period. This means if their group health plan doesn’t pay 100% of their healthcare bills during the 30-month coordination period, Medicare may pay for the remaining costs. Medicare is called the secondary payer during this coordination period. The group health plan will pay first on the health care bills and Medicare will pay second for a 30-month coordination period.
If you have a disabled employee, please contact your GuideStone account administrator.