Interaction with Public Health Coverage

You can have both private health coverage and public health coverage at the same time. If you become eligible for Medicare or Medi-Cal while on private coverage, don’t give up your existing coverage until you understand exactly what the interactions would be between your public and private benefits.

Who Pays First?

One issue that comes up when you’re on both public and private benefits is which pays first. In general, private benefits will pay first, followed by Medicare, and then Medi-Cal. When you get a medical service that is covered by your private coverage, that policy pays for it. If it’s not covered by private coverage, but is covered by both Medicare and Medi-Cal, Medicare pays for it. If it’s not covered by your private coverage or Medicare, and Medi-Cal covers it, Medi-Cal pays for it.

Example:
You have private coverage, Medicare, and Medi-Cal, and need surgery that requires you to purchase a wheelchair. All three types of coverage cover the surgery, so your private coverage pays for it. But neither your private coverage nor Medicare cover the wheelchair, so Medi-Cal pays for that as long as they approve it.

There are some exceptions where Medicare will pay before the private benefit if you are covered under an employer-sponsored plan and the employer has fewer than 100 employees. For more information on this exception, The Centers for Medicaid and Medicare Services has a helpful pamphlet on “Medicare and Other Health Benefits: Your Guide to Who Pays First”.

Medi-Cal Might Pay Private Coverage Premiums

If you’re on both Medi-Cal and private coverage, it’s important to know that, when it’s cost-effective for them to do so, Medi-Cal pays for private health coverage premiums. DB101’s program description of Medi-Cal has a description of the Medi-Cal Health Insurance Premium Payment (HIPP) program.

Medicare Enrollment

If you have private health coverage when you first become eligible for Medicare because of a disability, you’ll be automatically enrolled in Medicare Parts A and B. If you’d like to dis-enroll from Part B, you can do so, and sign up at a later time without paying a penalty. DB101’s section on Medicare Part B has more information. Along the same lines, you can choose not to elect Medicare Part D, and as long as your current private coverage is at least as good as the Part D benefit, you can sign up for Part D at a later time without paying penalties. DB101’s section on Medicare Part D has more information.

Sources

The following links are provided for those who want detailed information on private health coverage. For those looking for more general information and help, please go to DB101’s Private Health Coverage Resources page.

The Georgetown University Health Policy Institute publishes an excellent "Consumer’s Guide to Getting and Keeping Health Insurance in California". Guides for other states are also available.

Health coverage in California is regulated by the California Department of Insurance and the California Department of Managed Health Care (DMHC). To figure out which agency is in charge in particular case, the DMHC has this helpful chart.

The California Healthcare Foundation details the interaction between state and federal laws in its 2002 paper on "Regulation of ERISA Plans: The Interplay of ERISA and California Law", and summarizes rules on individual coverage in its 2005 Issue Brief on "Rules Governing California’s Individual Insurance Market".

The laws governing private health coverage in California are a complicated patchwork of state and federal regulations: