Final answer:
Medicare acts as the secondary payer when another insurance coverage should pay first, such as employer group health plans, workers' compensation, or automobile accident claims. After the primary coverage pays, Medicare may cover additional costs up to its approved amount, coordinating benefits with the primary insurance.
Step-by-step explanation:
Medicare typically operates as the primary payer for eligible beneficiaries; however, under certain conditions, it functions as the secondary payer. This situation arises when there is another insurance coverage that is responsible for paying first, such as when the individual is still employed and covered by an employer group health plan, has coverage through a spouse’s workplace, or is covered under workers' compensation. Other situations include automobile accident claims and the Black Lung Benefits Act.
When Medicare acts as the secondary payer, it coordinates benefits with the primary insurance. After the primary insurance has paid its share, Medicare may pay the remaining covered costs up to the Medicare-approved amount. Beneficiaries need to be aware of the coordination of benefits to avoid unexpected healthcare expenses. It is essential for those enrolled in Medicare to understand these details, as it impacts how medical claims are processed and paid.