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Primary vs. secondary coverage when you have two health plans

Even with the Affordable Care Act, which mandates that practically all Americans have health insurance, 15.9 percent of Americans lack coverage, according to the Gallup-Healthways Well-Being Index as of February 2014.

Now imagine being a person with not just one but two health plans.

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This double coverage can happen a couple of ways:

  • An adult child might be covered under a parent’s plan (which must be allowed until age 26), and also has a job with workplace benefits.
  • An employee might take his or her company’s health plan and also be enrolled under a spouse’s plan at the spouse’s workplace.

Having two health plans doesn’t mean you get reimbursed twice for your strep throat visit, or that you get two bottles of medicine at the pharmacy instead of one.

Coordination of benefits rules: Who pays first when you have two group health plans?

Primary

Secondary

Your workplace plan

Your parent's plan

Your workplace plan

Your spouse's workplace plan

There are a few downsides to what, on the surface, seems like health insurance heaven:

  • Double coverage often means you’re paying for redundant coverage.
  • You must make your claim with your “primary” plan first. The other plan can pick up the tab for anything not covered, but it won’t pay anything toward the primary plan’s deductible.
  • If both plans have deductibles, you’ll have to pay both before coverage kicks in.
  • You don’t get to choose which health plan is primary, meaning the one that pays first. You don’t get to choose which insurer will pay a certain claim. However, if the first insurer doesn’t cover a certain treatment, or covers it only partially, you can then submit the remainder of the claim to your secondary insurer for payment, assuming the treatment is covered under the second plan.

So who pays first? “The place you are employed is primary,” explains Matt Tassey, past chairman of the LIFE Foundation, now called Life Happens.

Thus, if you’re still covered under your parents’ plan and have group health at work, your workplace plan is primary. If you’re covered under your spouse’s plan and one at your work, your workplace plan is primary.

“The secondary plan pays any unpaid balance,” says Tassey. “It will not pay the deductible of the primary plan.”

These rules are known as “coordination of benefits.” The rules for adults shouldn’t be confused with the rules for children who are dependents on two parents’ group health plans. In the case of children with double health insurance coverage, the "birthday rule" applies. This practice says that the group plan of the parent with the first birthday in the calendar year is primary.

More from Amy Danise here

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