Benefits Q&A: Why Does CMS Say We Owe Them Money?

July 5, 2023

Confused about a letter from the Centers for Medicare & Medicaid Services? Learn why you may have received it and what to do next depending on your group health plan.

Benefits Q&A: Why Does CMS Say We Owe Them Money?


We received a letter/invoice from the Centers for Medicare & Medicaid Services asking us to pay them several thousand dollars. I have never seen anything like this before and can’t figure out how we could possibly owe them money. Why did we receive this? Should we just pay it?


The Centers for Medicare & Medicaid Services (CMS) sends this type of letter to employers in the following circumstances:

  1. An employee is enrolled in both their employer’s group health plan and Medicare;
  2. The employer’s plan is considered “primary” to Medicare. This means that under the law, if an employee has dual coverage, the employer’s plan must pay first. Any non-covered expenses under the employer plan may be paid by Medicare as secondary coverage.
  3. CMS believes Medicare incorrectly paid medical expenses that should have been paid by the employer’s group health plan.

In general, the employer’s plan will be considered primary unless the employer has fewer than 100 employees or the individual has end-stage renal disease. (However, Medicare is primary for retirees and COBRA coverage.)

What you should do about the letter depends on whether your group health plan is fully insured or self-insured. If fully insured, you (or your broker if you have one) should send it to your insurance carrier. They should pay it the same as any other covered expense. For self-insured plans, it’s a little more complicated. Your broker should be able to work with you to determine how to get the expense paid through your plan.

About The Author

Julie Athey, J.D.

Julie Athey, J.D.
Email As Director of Compliance & Legal, Benefits, Julie has more than 20 years of experience in compliance and law. Julie provides in-depth hands-on compliance training, advice and consulting for benefits and HR professionals. She has authored numerous manuals for HR professionals – including FMLA Compliance: Practical Solutions for HR and Wage and Hour Compliance: Practical Solutions for HR. Julie is also a frequent presenter at seminars, webinars and audio conferences on a variety of benefits, employment law and human resources topics.