Prior to 1983, Medicare was usually the primary payer of medical expenses. Any additional insurance an individual had was the secondary (or last) payer of benefits. The secondary payer paid some or all of the expenses Medicare did not cover.

Effective 1/83, Medicare became the secondary payer of benefits for certain aged individuals who were covered under group health plans (GHPs) by reason of current employment.

The persons affected were those who were age 65 or over but not yet age 70, and by reason of current employment, were covered under their own GHP or the GHP of a spouse who was age 65 or over but not yet age 70. The provision applies to GHPs of employers of 20 or more employees.

Individuals affected by this provision enrolled in SMI even though they were collecting little or no benefits because of the premium penalties and delays in starting coverage that had to be applied in all cases of enrollment after first eligibility. Section 2338 of P.L. 98-369 was enacted 7/18/84 to alleviate this hardship.