Small Employer Exception

If an employer, having fewer than 20 full and/or part-time employees, sponsors or contributes to a single-employer Group Health Plan (GHP), the Medicare Secondary Payer (MSP) rules applicable to individuals entitled to Medicare on the basis of age do not apply to such individuals.  If such an employer participates in a multiple employer or multi-employer GHP and at least one participating employer has at least 20 full and/or part-time employees, these MSP rules apply to all individuals entitled to Medicare on the basis of age, including those associated with the employer having fewer than 20 employees. However, the law provides that a multi-employer GHP may be granted an exception with respect to certain individuals entitled to Medicare on the basis of age and who are covered as a named insured or spouse (covered individual) of an employer with fewer than 20 full and/or part-time employees.

In order for an MSP Small Employer Exception (SEE) to exist, the multi-employer GHP must request an exception to the Working Aged MSP rules which must be approved by the Benefits Coordination & Recovery Center (BCRC). An approved exception will apply only with respect to the specifically named and approved beneficiaries associated with a specifically named employer participant in a specifically identified multi-employer plan. This exception applies only to individuals entitled to Medicare on the basis of age. All approvals are prospective. To request Medicare approval of a SEE, the multi-employer GHP must submit a written request, with all required supporting documents to the BCRC stating that the plan seeks to elect Medicare as the primary payer for each beneficiary who is associated with identified employers that participate in the specific multi-employer plan.

For the purposes of requesting the SEE, the term multi-employer GHP shall mean any trust, plan, association or any other arrangement made by one or more employers to contribute, sponsor, directly provide health benefits, or facilitate directly or indirectly the acquisition of health insurance by an employer member. (If such facilitation exists, the employer is considered to be a participant in a multi-employer GHP even if it has a separate contract with an insurer.) However, the GHP can, by agreement or otherwise, delegate the responsibility for requesting the SEE to the insurer.

To Apply for an Exception

The multi or multiple employer plan/authorized insurer should submit all requests for exceptions to the Benefits Coordination and Recovery Center (BCRC). Only those requests that are considered complete will be evaluated. Incomplete requests will be returned for completion and resubmission. In order to be considered complete, the request must be written and addressed to the BCRC using the Small Employer Exception (SEE) Package available in the Download section below.

The completed documents may be faxed or mailed. All information on the documents is required and must be fully completed and accurate for each covered individual for whom an exception is being requested. All new SEE requests must be accompanied by an employer certification. Make sure to read all instructions before completing the documents.

Plan administrators/insurers should note the following before applying for an SEE:

• No exception based upon employer size exists for beneficiaries entitled to Medicare based on permanent kidney failure (End Stage Renal Disease).
• If any participating employer is a multi or multiple employer plan who has at least 100 full and/or part-time employees, the plan is primary for all individuals entitled to Medicare on the basis of disability who have coverage based on their own or a family member's current employment status
• The date of the request will serve as the effective date, unless the request is dated more than 7 days prior to the receipt date, in which case, the receipt date will be used
• The effective date for requests that were returned for missing information will be based on the date the completed request is received in the BCRC
• The plan must notify the BCRC when the exempt employer meets or exceeds the 20-employee threshold or when there has been a change in the individual's employment or GHP coverage
• The plan is required to notify each employee (beneficiary) or his/her spouse for whom the plan is requesting Medicare be the primary payer