CMS Pub. 100-05, ch. 2, § 10.6

The size of the employer is a factor in determining whether Medicare is secondary or

primary payer under the working aged and disability provisions of the law. For MSP

purposes, the employer is the legal entity that employs the employees. For example, the

employer may be an individual, a partnership, or a corporation. Ordinarily, the identity

of that entity is clear.

There are situations, however, when it is not clear which corporation or individual is the

employing entity for MSP purposes. For example, when a corporation is owned or

controlled by another corporation, it must be decided which corporation is the employer.

Similarly, when related individuals each have businesses and each claim to be a separate

employer with either fewer than 20 or fewer than 100 employees, it must be decided

whether the individuals are separate employers or a single employer.

The MSP law contains the following rules for determining the size of the employer under

the MSP for the aged and disabled provisions. [See 42 CFR § 411.106]

A. Single Employers

Single employers under Section §52 of the IRC are defined as follows:

• All employers that are treated as single employers under subsections (a) or (b) of

§52 of the IRC are treated as single employers;

• Section 52(a) of the IRC provides that all employees of all corporations that are

members of the same controlled group of corporations are treated as if employed by a

single employer; and,

• Section 52(b) of the IRC provides that all employees of trades or businesses

(whether or not incorporated), e.g., employees of partnerships or proprietorships that are

under common control, shall be treated as employed by a single employer.

In general, two or more individuals or corporations are considered to be separate

employers under §52(a) or (b) of the IRC if they file separate income tax returns. Two or

more individuals are considered to be a single employer if they file a consolidated tax

return.

When there is a question about the tax status of a particular employer that claims to have

fewer employees than the 20 or 100 employee thresholds, A/B MACs and DME MACs

must request the employer to submit copies of its most recent tax return to resolve the

question.

B. Affiliated Service Groups

All employees of the members of an affiliated service group (as defined in Section

414(m) of the IRC) are treated as employed by a single employer.

C. Treatment of Religious Organizations

CMS does not aggregate religious organizations for MSP purposes. Incorporated

parishes and churches that are part of a church-wide organization, such as a diocese or

synod, are considered to be individual employers. A GHP or LGHP for employees of

such parishes or churches is considered to be a multi-employer GHP. (See

§10.3 and §10.4 of this chapter, for policies regarding multi-employer GHPs in

which at least one participating employer employs 20 or 100 or more employees

respectively.)