Once a year, the/your business will receive a MSP employer size survey.  It’s a simple form to complete that shouldn’t take more than 5 minutes.  Go ahead and use “back of the napkin” math to complete it unless you are right around 20 employees (part time & full time… just count humans, not hours worked).  THIS FORM WON’T DIRECTLY AFFECT YOUR COMPANY unless you are “self insured” or “experience rated”. And either way, you have no control over it.

The Medicare Secondary Payer (MSP) Act was passed by Congress in 1980 because Medicare is not solvent… and to prevent it’s financial collapse, Congress passed the some Medicare liabilities to employers / large companies.  In 2020, most companies received PPP money, EIDL money, Employee Retention Credits and various “stimulus payments”… likewise, there are many mechanisms like this in our financial / political system that “flow” through your business.  By starting a company, you are firmly an extension of government policy & power whether you like it or not. Medicare is a thing that “everyone” pays for… often unknowingly like a gasoline tax… out of sight and out of mind. This is one way Medicare is “paid” for in ways other than FICA taxes. (Note: Congress can order the Federal Reserve can just create / print money to solve all these problems… and some people will say, “crippling inflation & dollar debasement”, but that’s another blog post).

The MSP requires employers (or “owners” with many companies, y’all know who you are and the aggregation rules) with MORE than 20 employees to PAY for medical expenses BEFORE Medicare. If someone has both Medicare AND is enrolled in the company health plan (often called the “working aged”)… the company health plan picks up the cost of medical procedures first.  If there are expenses afterwards, Medicare is the “Secondary Payer”… with the human individual paying anything that’s left over.

Most small employers are “fully insured” which means that health insurance is purchased from an insurance company.  Many large employers (500+ people) are “self-insured” which means they pay for the cost of medical procedures with funds from operations… and hire a “third party administrator” (usually an insurance company) to deal with the paperwork.

So if you are a company with more than 20 employees AND self insured… Medicare will now say, YOU the company must pay for any medical claims for any employees that are “working aged” (i.e. have both Medicare AND are enrolled in the company health plan). If you are fully insured… Medicare will tell the insurance company they must pay those medical claims, and the insurance company passes those costs on to all of us who purchase from that insurance company.

Ultimately it flows into the macro system and we all pay for it in unseen ways.  The total cost remains the same (as it is dictated by the doctors)…but who pays the bill shifts.

Anyway, MSP is a fascinating topic if you want to dig into it… it’s part of the conversation that investors & employers / owners have with the government over the long term.  It’s ongoing and part of the USA genetic makeup.  But for today, just complete the form and send it in.  It’s nothing too important.