How Medicare Works with Employer, TRICARE, or Medicaid

🛡️ How Medicare Works with Employer, TRICARE, or Medicaid (2026)

Many people have more than one type of health coverage when they turn 65, continue working, or transition from employer coverage.
In 2026, understanding how Medicare coordinates with Employer insurance, TRICARE, and Medicaid is essential for avoiding penalties, unexpected bills, or gaps in coverage.
This guide explains who pays first, how each coverage interacts with Medicare, and what choices you must make to maintain full protection.

📘 Want a deeper Medicare guide for 2026?

If you’d like a step-by-step walkthrough of Medicare enrollment, plan choices, and
common pitfalls, these 2025–2026 guides can be helpful companions to this article:

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MEDICARE TURNING 65 IN 2026 — Most Common Medicare Questions Answered

👉
Medicare Plan Guide for Beginners (2025–2026 Edition)

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1️⃣ Employer Coverage + Medicare — Who Pays First?

How Medicare works with Employer Group Health Plans depends on the employer size and whether the coverage is based on your current employment.

✔️ Employer coverage is “current employment” only if you or your spouse are actively working.
COBRA, retiree health insurance, or Marketplace coverage do not count.

Situation	Who Pays First?
Employer has 20+ employees (age 65+)	Employer Plan pays first, Medicare pays second
Employer has <20 employees (age 65+)	Medicare pays first
Disability + employer has 100+ employees	Employer Plan pays first
End-Stage Renal Disease (ESRD)	Employer Plan pays first for 30 months

If you are still working for a large employer (20+ employees), you may choose to delay Part B without penalty.
But if the employer has fewer than 20 employees, you must enroll in Part B to avoid gaps in coverage.

2️⃣ TRICARE & CHAMPVA — Required Medicare Rules

TRICARE and CHAMPVA have strict coordination rules.
If you are eligible for Medicare due to age or disability:

Most people must have both Part A and Part B to keep TRICARE.
TRICARE for Life (TFL) works as secondary coverage after Medicare.
Active-duty service members are the main exception.

⚠️ If you skip Part B when first eligible, you will lose TRICARE until you enroll.

CHAMPVA also requires both Part A and Part B for continued eligibility.

3️⃣ Medicaid & Medicare — Understanding Dual Coverage

Medicaid never replaces Medicare. When you qualify for both:

Medicare always pays first.
Medicaid pays after Medicare for remaining costs.
You may qualify for a Medicare Savings Program (MSP) that pays Part B premiums.

💡 If you lose Medicaid in 2026, you may qualify for a special opportunity to enroll in Medicare without penalties.

4️⃣ Avoiding Late Enrollment Penalties

The biggest risk for people with other insurance is missing the correct Medicare enrollment period.
You may owe lifetime penalties if you delay the following:

Part B — 10% penalty for every full 12 months delayed
Part D — penalty applies unless you had “creditable coverage”

Example — Employer under 20 employees:

John (age 65) works for a company with 12 employees. He keeps only employer coverage and delays Part B.
Because the employer has fewer than 20 employees, Medicare should have been primary.
When he eventually signs up, John must pay:

Part B penalty for every full year delayed
Large medical bills Medicare would have paid first

5️⃣ Practical Coverage Tips for 2026

Confirm employer size and whether coverage counts as “current employment.”
Don’t rely on COBRA or retiree coverage as primary insurance after age 65.
Enroll in Part B on time if you have TRICARE or CHAMPVA.
Check if you qualify for a Medicare Savings Program to reduce costs.
Review coverage every year during Medicare Open Enrollment (Oct 15–Dec 7).

🔗 Helpful Links

📚 Medicare Made Simple (2026 Edition)

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