TERFA/OBRA Medicare Coverage Guidelines

TERFA OBRA Web Image of women looking at papers

Federal law requires certain employer health plans to provide primary payment for covered health costs over Medicare. These are for any individual who is covered under the plan by virtue of the individual’s current employment status and who is either:

  1. 65 or more years of age, and/or 
  2. whose spouse (including a divorced or common law spouse if the spouse is otherwise covered under the group health plan) is 65 or more years of age.


  1. under age 65 and eligible for Medicare, or 
  2. who has a family member under age 65 and is eligible for Medicare. A “family member” is defined as a person who is enrolled in a large employer health plan based on the employee’s enrollment. Family members may include a spouse (including a divorced or common law spouse) or an Eligible Dependent.

Such an individual and/or their spouse also has the option of rejecting coverage under the employer health plan. If coverage under the employer health plan is rejected, Medicare will be the primary health insurance payer. In such a case, the employer health plan is not permitted to offer coverage that supplements Medicare covered services.

In order for BCBSND to track who should be the primary payer for Medicare eligible individuals, we ask that employers help us identify their appropriate size, as defined under the federal laws of the Tax Equity and Fiscal Responsibility Act (TEFRA) and Omnibus Budget Reconciliation Act (OBRA).  

Affect by total number of employees:

  • Under 20 total employees: Not affected; N/A
  • 20 – 99 total employees: TEFRA affected
  • 100+ total employees: OBRA affected

Be sure to have your total number of employees ready to confirm with your BCBSND representative at renewal time.