Can You Have Private Medical Insurance As Well as Medicare?

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( — August 8, 2022) — In the United States, health coverage is separated between private and public health insurance plans. Private insurance is offered by private companies and employers, while public insurance, like Medicare, is government funded. You can have both of these options at the same time.

How Private Insurance Interacts With Publicly Funded Medicare

Americans can have private insurance and Medicare at the same time. When a patient has both, insurance providers will determine who pays first during a process called “coordination of benefits.” Whoever is given that responsibility becomes the “primary payer” for most expenses. 

Since Medicare (and other types of publicly insured healthcare) is associated with lower costs, Medicare will take over as the primary payer unless costs aren’t covered by said insurance. The secondary payer or insurer takes over once the primary payer’s coverage limit is reached.

Understanding Insurance Options That Work With Medicare

There are a wide variety of insurance options that work with your Medicare coverage. Most of these options make up for services that aren’t offered or included in Original Medicare.

For example, Medigap or Medicare Advantage fill gaps in your medical plan but do so in different ways. Medicap takes care of services that are covered in your Medicare coverage, whereas Medicare Advantage combines parts A and B from Medicare and Part D from Medigap.

You can also receive coverage through an employer under your spouse’s private health insurance, COBRA and TRICARE. COBRA allows you to temporarily keep your coverage after your employment ends, and TRICARE provides coverage for active/retired military members.

How COBRA and TRICARE Effect Primary Payers

When you have COBRA and Medicare, Medicare will pay first if you have a disability, ALS, or you’re 65 years old or older. Medicare will pay second if you have an end-stage renal disease (ESRD), and there’s an overlap between COBRA coverage and your Medicare eligibility.

When you combine TRICARE and Medicare, the process is more simple. If you’re on active duty, TRICARE will pay first. If you’re not on active duty, Medicare will always pay first.

Why You Should Sign Up for Medicare and Private Insurance

Medicare covers up to 80% of your medical expenses, so private insurance options like Medigap can provide additional coverage at a low cost. Since Medicare is often provided to the most at-risk populations, it makes sense to invest in Medicap to protect you and your wallet.

It’s important to note that Medigap doesn’t cover certain treatments, such as private nursing, hearing aids, dental care, long-term care, and vision care. Medicare’s upgrade, Medicare Advantage, can also be expensive if you become sick due to high copayments and premiums. 

Cost Differences Between Medicare and Private Insurance

It can be challenging to compare the costs of each plan, as their premiums, deductibles, copays, and coinsurance vary greatly. Factors that affect costs include but aren’t limited to the person’s age, where they live, the out-of-pocket expenses, and the benefits of the plan. 

However, Medicare will always be cheaper than private insurance, as Medicare Part A, B, and D together cap out at $1500 a year if the person paid Medicare tax for fewer than 30 quarters. 

On average, private insurance costs $8,000 a year for individuals or $25,000 a year for families. If private insurance is paid by the employer, this cost is reduced by several thousands of dollars. If you have Medicare, private insurance should be used to top up your Medicare coverage.

Popular Medicare Supplements (Medigap Coverage) to Consider

Plan D, Plan G, Plan F, Plan K, and Plan N are popular Medicare supplements because they’re inexpensive and cover specific Medicare deductibles, coinsurance, and excess charges. Plan D is absolutely necessary if you require affordable medications for a chronic illness or condition.