Final answer:
Medicare coordination with an employer's group health plan determines primary and secondary payer status, with Part A of Medicare covering some hospital costs supplemented by payroll deductions and employer contributions. Employment-based insurance groups individuals with varying health risks and is a part of the total compensation for employees.
Step-by-step explanation:
When a Medicare patient is also covered through an employer's group health plan, it often becomes necessary to coordinate benefits to determine which plan is considered the primary payer and which is the secondary. Medicare has two parts, with Part A covering some hospital charges. It is funded by payroll deductions and contributions from employers, but beneficiaries must pay deductibles and copayments. Employment-based insurance provides health coverage, which is partly funded by employers. Such insurance is a solution to the adverse selection problem in insurance markets, by combining individuals with various health risks within a group plan. The Affordable Care Act also tried to reduce the adverse selection by establishing health exchange markets and preventing denial of coverage for preexisting conditions. Insurance benefits, including retirement plans and Medicare, are elements of total compensation that employees receive.