Determining which insurance plan has the primary responsibility of payment when covered by multiple plans, explore why coordination of benefits is vital.
Did you know that the concept known as coordination of benefits (COB) allows you to maximize your health insurance coverage if you have access to more than one plan? Lots of people aren’t aware of this.
Of course, the main reason for coordination of benefits is to keep people from “double-dipping” (most of the time inadvertently) or having the same claims covered more than once by different insurers. We’ll say more on this later.
The first parts of this article will discuss representative situations in which one or more people might be subject to insurance companies’ coordination of benefits policies.
What Would Make Someone Subject to Coordination of Benefits Policies?
When someone is covered by two (or more) health insurance plans, COB is the provision and process that defines which plan should pay and under which circumstances.
There are several different circumstances in which COB would be needed, at least temporarily, to determine which policy covers which expenses or portion of a given medical bill. We’ll discuss these circumstances and the provisions here:
A Married Couple in Which Both Spouses Have Coverage
In most cases, the plan of the spouse whose treatment is being covered would be the primary payer; that person’s spouse’s plan would be secondary.
You might wonder why the couple would even want coverage for both spouses since they would need to pay premiums for two plans. They might not, depending on their circumstances and needs.
However, there is the possibility that one spouse’s plan provides more coverage for a specific type of healthcare than the other. Examples would include organ transplantation or mental health services.
A Child Has Coverage Available from Both Married Parents
Lucky kid! Here, the “birthday rule” is the determiner: The parent with the earlier birthday in a calendar year is the one whose insurance plan will be considered primary.
If both parents have the same birthday, the primary coverage will be from the plan that has covered the pertinent parent longer.
A Child Has Divorced Parents, Both with Coverage
In this case, the child ordinarily would be covered by the custodial parent’s insurance. If that parent remarries, the step-parent’s plan might provide secondary coverage. The plan of the parent without custody typically pays last.
In a joint custody situation, the birthday rule usually applies. However, a divorce decree might influence which plan is primary.
If the decree states that one parent is financially responsible for the healthcare expenses of the child, then that parent’s plan would be primary for the child and the other parent’s secondary.
If the decree states that both parents are responsible, then their plans would be given the same priority and the determination would revert to the birthday rule described above.
A Child Has Their Own Policy But Also has Parental Coverage Through Age 26
Age 26 is the oldest a non-disabled child may remain on one or more parents’ insurance coverage. The answer to this one is simple: the child’s plan is primary and the parents’ plan(s) is/are secondary.
A Married Child Is Continuing Parental Coverage Through Age 26
This is perfectly acceptable. the situation is fundamentally the same as the previous one: the child’s or his/her spouse’s plan is primary, while the parents’ plan is secondary.
A Child Under Age 26 with Parental Coverage Is Expecting a Child
This one is a little more complicated. What’s described in the two previous situations would apply here as well–but with one important difference: Once that child is born she/he would be on their own insurance-wise.
The mother would retain her parents’ coverage through age 26, but the baby would require new coverage–possibly through the Affordable Care Act.
Someone Has Workers’ Compensation Along with Health Insurance
If someone is injured on the job, workers’ compensation is the first payer.
Someone Has End-Stage Renal Disease (ESRD)
ESRD makes someone of any age eligible for Medicare coverage–at least until two years after that person has had a successful kidney transplant.
As long as that person remains eligible for Medicare, though, and has maintained additional coverage (e.g., from an employer), that person will be subject to COB decisions regarding billing. And there will be a lot of billing.
Someone Has Military Coverage (TRICARE) or Veterans Administration (VA) Coverage Along with Other Coverage
For military personnel, TRICARE is considered secondary to all other health plans except for Medicaid, TRICARE supplements, state crime compensation programs, and other specified federal government programs.
Those on active duty may not use any other health insurance.
The VA is not a health insurance plan. Instead, it bills other providers for care, services, prescriptions, and supplies. If a spouse has a health insurance plan it would be the veteran’s health plan.
Someone is Eligible for Medicare Even Though They’re Still Working
When someone turns 65, they’re eligible for Medicare, even if they’re still working and receiving coverage from an employer’s plan. Which plan is primary, though?
The answer most likely depends on how big the person’s company is. If the company has 20 or more employees, it will provide the primary coverage, and Medicare will be secondary.
If the company has fewer than 20 employees, Medicare generally will provide the primary coverage. There are exceptions, though.
How to Know What an Insurer Allows Regarding Coordination of Benefits
You can locate COB information in the health insurer’s certificate of coverage or by calling the company. The certificate is often online, so you should check your insurance company’s site first.
The advice given to medical practices is this: The practice should know that the billing paperwork begins when the patient arrives. They need to check each patient’s coverage to find out who is responsible for each part of the bill when it’s issued.
What Is Coordination of Benefits?
Health insurance providers have well-defined coordination of benefits provisions in their policies and collaborate to find ways for each insurer to pay its fair share.
Coordination of benefits involving both insurers makes it easier to avoid duplication of the benefits while still providing the coverage the insured is entitled to.
We hope you found this article informative.
If you’ve read it because you work for a medical practice, there’s a fair chance you’ll need one or more of our services at some point. When that day comes, let us know right away. We’d be more than happy to help you!