There’s a way for you to get covered by two health insurance plans. It’s called coordination of benefits (COB), which allows you to have multiple health plans.

It works this way: Health insurance companies have COB policies that allow people to have multiple health plans. It also makes sure insurance companies don’t duplicate payments or reimburse for more than the health care services cost.

Coordination of benefits?

COB creates a framework for the two insurance companies to coordinate benefits so they pay their fair share when both plans pay. COB decides which is the primary insurance plan and which one is secondary insurance. You can think of the secondary payer as supplemental coverage to help you pay for out-of-pocket costs.

The primary insurance pays first its share of the health care costs. Then, the secondary insurance plan will pay up to 100% of the total cost of health care, as long as it’s covered under the plans. The plans won’t pay more than 100% of the health care cost, so you’re not going to get double the benefits if you have multiple health insurance plans.

Key Takeaways

  • Health insurance plans have a coordination of benefits system when the member has multiple health plans.
  • The health plan that pays first depends on the type of plan, size of the company and location.
  • The two insurers pay their portions of the claim and then the member pays the rest of the bill.

Coordination of benefits rules

COB rules depend on the size and type of the plan. Your state can also dictate the rules. Plus, large employers may have their own COB rules for medical claims.

Typically, Medicaid is always considered a secondary payer. Medicare is either primary or secondary, depending on the circumstances. For instance, Medicare is the primary payer if the other insurer is a small business, but it’s secondary when the other payer is a large company.

If you and your spouse have employer health plans, your employer is generally the primary payer for you and your spouse’s plan is secondary.

For workers’ compensation, the worker’s comp pays first and your health insurance plan would be considered secondary.

Check out the table below on the page for more instances, including how private insurers coordinate for children’s health coverage, COBRA and Veterans Administration.

Understanding the coordination of benefits system

Here’s an example of how the process works:

  • Let’s say you visit your doctor and the bill comes to $100.
  • The primary plan picks up its coverage amount. Let’s say that’s $50.
  • Then, the secondary insurance plan picks up its part of the cost up to 100% — as long as the insurer covers the health care services.
  • You pay whatever the two plans didn’t cover.

That sounds great, right? Well, having two health plans also means that you’ll likely need to pay two premiums and deal with deductibles for two health plans.

Let’s review COB, when they are needed, whether you should get dual coverage, what to do if you have issues with COB and some tips from experts.

Situations when coordination of benefits is needed

There are various situations when two health insurers need to coordinate on medical claims. You and your spouse may be eligible for two different policies from your jobs. Your spouse might be on Medicare and you have your own health plan. You might be under 26 and have your employer’s coverage and a parent’s insurance.

Here is a list of situations and which plan would likely serve as primary insurer and which ones would probably be secondary:

SituationWho’s primaryWho’s secondary
You’re married and both you and your spouse have separate health plansYour employerYour spouse’s employer
A child has dual coverage by married parentsWhichever parent has the first birthday in calendar yearParent with later birthday
A child has divorced parentsWhoever has custody
A child has own policy (from school or work) and still on parent’s policy until 26Child’s planParent’s plan
A child is married and on spouse’s policy and continues on parent’s policy until 26Child or child’s spouse’s planParent’s plan
A child under 26 is pregnant and on a parent’s planChild’s plan
Workers’ compensation and health insurance planWorkers’ compensationHealth plan
COBRA and other insuranceEmployer’s planCOBRA
Medicare and a private health insurance planMedicare if employer has 100 or fewer employees; private insurer if more than 100 employeesPrivate insurer is 100 or fewer employees; Medicare if more than 100 employees
Veterans Administration (VA) and a private health insurance planPrivate insurer
Military coverage (TRICARE) and other health insuranceOther insurerTRICARE except if other plan is Medicaid
Medicaid and a health insurance planHealth insurance planMedicaid

Here’s more information about the above scenarios:

A child has dual coverage by married parents – In this case, the so-called “birthday rule” will apply. The birthday rule means whichever parent has the first birthday in a calendar year is the one whose insurance plan is considered primary.

Remember — it’s not who is oldest. It’s where the birthday (month and day) falls in the calendar year. If parents have the same birthday, the primary coverage will go to the plan that has covered a parent longer.

A child has divorced parents – The child is usually covered by the parent who has custody. If the child’s custodial parent remarried, the step-parent’s plan may provide secondary coverage for the child. The plan of the parent who doesn’t have custody usually pays last. If it’s joint custody, the birthday rule usually applies.

Note: A divorce decree may also influence which plan is primary. If the divorce states that one parent is financially responsible for the child’s healthcare expenses, that parent’s plan should be primary for the child and the other parent’s policy is secondary.

If the decree states that both parents are responsible, their plans would be given the same priority, thus reverting back to the birthday rule for who would pay first.

A child under 26 is pregnant and on a parent’s plan – The health insurance status would stay the same for the under 26 child; the parent’s insurance serves as secondary.

However, the newborn is different. Once the child is born, he/she will need to be covered by his/her parent – not his/her grandparent. The grandchild is not a dependent to the grandparents. Thus, their insurance would not extend to that child.

Medicaid and a health insurance plan – Medicaid is always the payer of last resort when there are multiple plans.

Veterans Administration (VA) and a private health insurance plan – VA is not considered a health insurance plan. Instead, the VA bills public or private health insurance providers for care, services, prescriptions and supplies. So, if your spouse has a health insurance plan, it would be your health plan.

Military coverage (TRICARE) and other health insurance – TRICARE is considered secondary to all other health plans except Medicaid, TRICARE supplements, state crime compensation programs and other specified federal government programs. Note: If you are on active duty, you can’t use any other health insurance. TRICARE is your only health insurance coverage.

You can locate COB information in the health insurer’s certificate of coverage or call your insurance company. The certificate is often online, so you can check your insurance company’s site first to see if that is provided there.

Frequently Asked Questions

Can you have two health insurances?

Yes, you can have more than one health plan.

Having two health plans may mean having to pay two premiums. However, two health plans may also help reduce out-of-pocket expenses when you need health care.

What is secondary insurance?

Secondary insurance is the health plan that pays second as part of the COB process.

The health plan that pays first and which one pays second depends on the type of plans and the situation. Check the table earlier on the page to see some of the scenarios.

How does coordination of benefits work in health insurance?

COB is a process that decides which health plan pays first when you have multiple health insurance plans. These plans are called primary and secondary plans.

Who is responsible for coordination of benefits?

The health insurance plans handle the COB. The health plans use a framework to figure out which plan pays first — and that they don’t pay more than 100% of the medical bill combined.

The plan type guides a COB. Factors that play a part in deciding which plan pays first are based on the state and size and type of the type of plan. Large employer plans can create their own rules.

What is coordination of benefits in medical billing?

COB helps insurance companies with the medical claims billing process.

After you receive health care services, the provider bills the insurance company or companies. The primary insurance company reviews the claims first and decides what it owes. Then, the secondary plan reviews what’s left of the bill and provides its payment.

Once the payers handle their parts of the medical claim, the patient receives a bill from the provider for the rest of the medical costs.

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