Medicare with Job-Based Coverage, Retiree Coverage, or COBRA

Adapted from How Medicare Works with Other Insurance, Centers for Medicare & Medicaid Services. The selected guidance concerns Medicare coverage and payment, not a recommendation for medical treatment. Numbered page references below refer to the linked source publication.

Coverage can depend on medical necessity, the setting, provider participation, and your plan’s rules. Use the cited publication for the full conditions and check the plan year when comparing costs or enrollment choices.

How does Medicare work with other types of coverage?

Coordination of benefits with Medicare depends on which insurance is considered “primary” and which is “secondary.” The insurance that pays first (primary payer) pays up to the limits of its coverage. The insurance that pays second (secondary payer) only pays if there are costs the primary insurance didn’t cover, and the secondary payer covers the service.

Some of the factors that influence who pays first are:

• The type of coverage you have
• Your age
• If you’re retired
• If you’re disabled and/or have End-Stage Renal Disease (ESRD)

Note: For the situations described in this section, “spouse” includes both opposite-sex and same-sex marriages where you’re:

• Entitled to Medicare as a spouse based on Social Security’s rules; and
• Legally married in a U.S. jurisdiction that recognizes the marriage—including one of the 50 states, the District of Columbia, or a U.S. territory (or a foreign country, so long as that marriage would also be recognized by a U.S. jurisdiction).

An employer, insurer, third party administrator, group health plan, or other plan sponsor may choose to have a more inclusive definition of spouse than what’s described above. If that happens, the plan may (but isn’t required to) pay first for someone it considers a spouse under its definition. Contact your employer or insurer if you have a question about its definition of “spouse” and how it pays claims for you and your spouse.

Coverage from a group health insurance plan

Many employers, employee organizations and unions offer group health plan coverage to current employees or retirees. You may also get group health plan coverage through the employer of your spouse or another family member (like a domestic partner, parent, son, daughter, or grandchild). Generally, a group health insurance plan gives health coverage to employees and their families.

If you have Federal Employees Health Benefits (FEHB) Program coverage, your coverage works the same as other group health insurance plans.

If you have coverage from a group health insurance plan through your (or a spouse or family member’s) current employer, who pays first depends on things like your age and the number of employees in the company (or multi-employer health insurance group).

You’re 65 or older and have group health plan coverage based on your (or your spouse’s) current employment status (including self-employment). Who pays first?

• If your (or your spouse’s) employer has 20 or more employees (or has less than 20 employees, but is part of a multi-employer group where at least one company has 20 or more employees):
• Generally, your (or your spouse’s) group health plan pays first and Medicare pays second. If the group health plan didn’t pay your entire bill, your provider should send the bill to Medicare for secondary payment. You may have to pay any costs Medicare or the group health plan doesn’t cover.
• Employers with 20 or more employees must offer current employees age 65 and older the same health benefits under the same conditions that they offer employees under 65. If the employer offers coverage to spouses, it must offer the same coverage to spouses 65 and older that it offers to spouses under 65.

Note: Your plan may ask for an “exception” to opt out of a multi-employer group health plan. Check with your plan first and ask whether it will pay first or second for your claims.

• If your (or your spouse’s) employer has fewer than 20 employees (and isn’t part of a multi-employer group where at least one company has 20 or more employees):
• Medicare pays first and the group health plan pays second.

What happens if you don’t accept your (or your spouse’s) employer coverage?

Medicare pays its share for any of your Medicare-covered health care services, even if you don’t take group health plan coverage from your or your spouse’s employer.

Remember: If you don’t take employer coverage when it’s first offered to you, you might not get another chance to sign up. If you take the coverage but drop it later, you may not be able to get it back. Also, you might be denied coverage if your (or your spouse’s) employer generally offers retiree coverage, but you weren’t in the plan while you or your spouse were still working. Call your employer’s benefits administrator for more information before you decide.

You’re 65 or older, still working, and in a Health Maintenance Organization (HMO) Plan or an employer Preferred Provider Organization (PPO) Plan that pays first. Who pays if you get services outside the employer plan’s network?

If you get care outside your employer plan’s network, it’s possible that neither the plan nor Medicare will pay. Call your group health plan before you go outside the network to find out if it will cover the service.

You’re 65 or older, retired, and have retiree coverage from a group health insurance plan through your (or your spouse’s) former employer. Who pays first?

Medicare pays first, and your (or your spouse’s) group health plan pays second.

What about drug coverage?

• Check with your benefits administrator before you add Medicare drug coverage. If you have employer or union coverage and add Medicare drug coverage, you may lose your employer or union benefits (including any non-drug health coverage) for yourself and/or your spouse or dependents. If this happens, you may not be able to get your employer or union coverage back. This is true even if you get Extra Help (a Medicare program to help people with limited income and resources pay Medicare drug coverage premiums, deductibles, coinsurance, and other costs). If you have retiree coverage, check with your benefits administrator to find out if you’ll lose retiree benefits (including any non-drug health coverage) for yourself and/or your spouse or dependents if you add Medicare drug coverage.
• If you have drug coverage through your current or former employer, your employer or union will notify you each year to let you know if your drug coverage is creditable. Keep this information for your records.
• You can wait to join a Medicare drug plan and not pay a penalty if your drug coverage is creditable and you don’t go without creditable prescription drug coverage for 63 or more days.
• Federal Employee Health Benefits Program (FEHB) plans include creditable prescription drug coverage, so you don’t need to get Medicare drug coverage. However, if you decide to get Medicare drug coverage, you can keep your FEHB plan, and in most cases, Medicare will pay first.

What happens to your group health plan coverage after you retire?

It depends on the terms of your specific plan. Your or your spouse’s employer or union might not offer any health coverage after you retire. Also, if you can get group health plan coverage after you retire, the plan might have different rules and might not work the same way with Medicare. Call your employer’s benefits administrator for more information.

How does retiree coverage work with Medicare?

Your former employer or union manages any retiree coverage you have with that organization. Employers and unions aren’t required to offer retiree coverage, and they can change benefits or premiums, or even cancel coverage at any time.

If your former employer offers retiree coverage, the coverage might not pay your medical costs for any period when you were eligible for Medicare but didn’t sign up for it. When you become eligible for Medicare, you may need to sign up for both Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) to get full benefits from your retiree coverage.

Your former employer or union may offer limited retiree coverage. For example, it might only provide “stop loss” coverage, which starts paying only when your out-of-pocket costs reach a certain amount.

If you aren’t sure how your retiree coverage works with Medicare, get a copy of your plan’s benefit materials, or review the summary plan description your former employer or union gave you. Call your former employer’s benefits administrator for more information about how the retiree plan pays when you have Medicare.

Coverage from COBRA

What’s COBRA?

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that may allow you to temporarily keep employer or union health coverage after your employment ends or after you lose coverage as a dependent of the covered employee. This is called “continuation coverage.”

In general, COBRA only applies to employers with 20 or more employees. However, some states require insurance companies covering employers with fewer than 20 employees to let you keep your employer or union coverage for a period of time.

If you have Medicare and COBRA continuation coverage, who pays first?

If you have Medicare because you’re 65 or over, or because you have a disability, Medicare pays first.

If you’re eligible for Medicare because of ESRD, COBRA pays first, and Medicare pays second during a coordination period that lasts up to 30 months after you’re first eligible for Medicare. After the coordination period ends, Medicare pays first.

What happens if you have group health plan coverage after you retire, and your former employer goes bankrupt or out of business?

If your former employer goes bankrupt or out of business, federal COBRA rules may protect you if any other company within the same corporate organization still offers its employees a group health plan. That plan may be required to offer you COBRA continuation coverage. If you can’t get COBRA continuation coverage, you may have the right to buy a Medigap policy even if your Medigap Open Enrollment Period is over. Contact your State Health Insurance Assistance Program (SHIP) to find out if you can still buy a Medigap policy. To get the phone number for your local SHIP, visit shiphelp.org, or call 1-800-MEDICARE. TTY users can call 1-877-486-2048.

What about drug coverage?

There may be reasons why you should take Medicare drug coverage instead of, or in addition to, COBRA. If you take COBRA and it includes creditable prescription drug coverage, you’ll have a Special Enrollment Period to join a Medicare drug plan without a penalty when COBRA ends.

What else do you need to know?

Deciding if and when you should take COBRA coverage can be very complicated. When you lose employer coverage and you have Medicare, you need to be aware of your COBRA election period, your Medicare Part B (Medical Insurance) enrollment period, and your Medigap Open Enrollment Period. Each of these periods may have different deadlines, and those deadlines might overlap. You should be aware that what you decide about one coverage type (COBRA, Medicare Part B, and Medigap) might cause you to lose rights under another.

Before you take COBRA coverage, you can talk with your SHIP counselor about Medicare Part B and Medicare Supplement Insurance (Medigap). To get the phone number for your state’s SHIP, visit shiphelp.org, or call 1-800-MEDICARE.

Source and further reading

How Medicare Works with Other Insurance — Centers for Medicare & Medicaid Services. Public domain U.S. government educational material, accessed October 28, 2026. Fynoptic has selected sections, removed print navigation, and reformatted the text for this guide. The agency does not endorse Fynoptic.