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Question: We would like to write our plan to have a spousal exclusion or surcharge if the spouse has other coverage available. Every example I have looked at only refers to group health plans, and does not include eligibility for Medicare. I know we can’t incent people to enroll in Medicare, but do you know if there is particular rationale for only doing the exclusion for spouses on a GHP, and not Medicare or other similar coverage?
Answer: Federal law, known as the “Medicare Secondary Payer” (MSP) rules, establish that a large group health plan is the primary payer in cases where the claimant is both a covered active employee (or spouse) and a Medicare beneficiary. (There are some exceptions for small group plans and/or end-stage renal dialysis patients.) Further, the MSP rules generally prohibit employer-sponsored group health plans from “taking into account” the employee’s (or spouse’s) Medicare entitlement.
The MSP rules determine “who pays first” — the group health plan or Medicare. This is very different from dual coverage situations involving two (or more) group health plans; in that case, the coordination of benefits provisions in the group health plans determine which plan pays first. For this reason, so-called “spousal exclusion” or “spousal surcharge” provisions, refer to other group health plan coverage without regard to Medicare entitlement.