In a world where bigger is often better, does it make sense to supersize your medical coverage by carrying two health insurance plans?
Strange as it may sound, there are policyholders who have two health insurance plans rather than just one. For example, some seniors who are enrolled in Medicare also have a health insurance policy through an employer. Others may have coverage both through their own workplace and that of their spouse.
With dual health insurance plans, one is considered “primary” while the other is deemed “secondary.” In some situations, having two health insurance plans can reduce your out-of-pocket costs. But in other cases, the added premium payment and deductible might increase your overall health expenses and cause further complications.
David Mordo, former national legislative chair and current regional vice president for the National Association of Health Underwriters, however, says it is rare. “You don’t run across folks that have two separate health insurance policies,” he says.
However, that does not mean it never happens. Understanding your own health care needs is crucial to determining whether you can benefit from two health insurance plans, Mordo says.
“When we hear of circumstances where a couple or a person has two insurances, we really ask why,” he says. “We really ask them to dig down deep into ‘What are you paying in premium, as opposed to what you are getting in benefit?”
- Having two health plans can help cover normally out-of-pocket medical expenses, but also means you’ll likely have to pay two premiums and face two deductibles.
- Your primary plan initially picks up coverage costs, followed by the secondary plan. You might still owe out-of-pocket costs at the end.
- Health plans have coordination of benefits, which is a process that decides which plan is primary and which one pays second.
- In many cases, the benefits of having a second plan are modest. But there are situations where it can pay off.
Can you have two health insurance plans?
Yes, you can have two health plans.
The most common example of carrying two health insurance plans is Medicare recipients, who also have a supplemental health insurance policy, Mordo says.
While that type of coverage is relatively common, other instances of dual health insurance plans are unusual, but do occur.
For example, it’s possible that a married couple could have two health insurance plans, even if each spouse is covered through a health insurance plan at their workplace.
You also might have two health insurance plans if you have health insurance through an employer, but also receive Medicaid or Medicare coverage. For example, some seniors may continue to work past the age of 65, in which case they can be covered by both Medicare and an employer-based plan.
“The reason why active employees stay on that employer plan is because of the prescription drug coverage,” Mordo says. “That’s a huge advantage.”
Or perhaps you are under the age of 26 and have group coverage both through an employer and your parents’ health insurance.
When you might have two insurance plans
- An injured worker who qualifies for worker’s compensation but also has his or her own insurance coverage.
- A military veteran who is covered by both Veterans Administration benefits and his or her own health plan.
- An active member of the military who is covered both by military coverage and his or her own health insurance.
Primary and secondary insurance rules
When you have two forms of health insurance coverage, your primary insurance pays the first portion of the claim up to your coverage limits. Your secondary insurance may pick up some or all of the remaining costs.
However, you still might be responsible for some cost-sharing. For example, it’s a mistake to think your secondary insurance will kick in and cover the deductible attached to your primary insurance. Instead, you likely will be responsible for covering the deductible.
You also may be responsible for copay and coinsurance fees.
Coordination of benefits
When you have primary and secondary health plans, the insurers use a framework to work together. That way, both health plans pay their fair share without paying more than 100% of the medical costs. This process is called coordination of benefits.
Coordination of benefits decides which plan pays first (the primary plan) and which pays second (the secondary plan).
In some cases, a state or the federal government may set up the COB regulations. Large employer group plans create their own COB rules, too.
Here’s how COB works when there’s a health insurance claim:
- It first goes to the primary plan. The insurer pays what it owes.
- If there’s money still left on the bill, it then goes to the secondary insurer, which picks up what it owes.
- After that, if there’s still money left on the bill, the member gets a bill for the remaining money.
What is the difference between primary and secondary health insurance?
When a member has double insurance, his or her individual circumstances determine which insurance is primary and which is secondary. Following are some examples of how this might work:
- A married couple — A wife has a health plan with her employer, but her husband’s health plan also covers her. In this case, the wife’s employer is the primary insurer and the spouse’s health plan is secondary.
- A child under 26 — The Affordable Care Act lets children stay on their parents’ health plan until they turn 26. That could result in a child having her own health plan through an employer while remaining on the family’s plan. In that case, the child’s health plan is primary and the parents’ plan is secondary.
- Parents have separate plans and a child is on both plans– In this situation, the so-called birthday rule applies. Whichever parent has the earlier birthday in a year is considered the primary health plan and the other spouse is secondary. It’s not which parent is older. Instead, it’s which one has the earliest birthday in a calendar year.
- Medicare and a private health plan – Typically, Medicare is considered primary if the worker is 65 or older and his or her employer has less than 20 employees. A private insurer is primary if the employer has 20 or more employees.
The primary insurance payer is the insurance company responsible for paying the claim first.
How does primary insurance work?
When you receive health care services, the primary payer pays your medical bills up to the coverage limits. The secondary payer then reviews the remaining bill and picks up its portion.
Coordination of benefits rules determine which of your insurance companies is the primary payer.
The secondary health insurance payer covers bills that the primary insurance payer didn’t cover.
How does secondary insurance work?
After the primary insurer has paid its part of the insurance claim, the remainder of the claim moves on to the secondary insurer. The No. 2 insurer then pays its portion of the claim.
However, it is crucial to remember that the secondary insurance company may not pay all of the rest of your bills. You may be responsible for some health care costs.
Also, the primary and secondary insurance companies make sure they aren’t paying more than 100% of the overall bill. They do this through a process known as “coordination of benefits” that helps to make sure each company pays its own part of the claim without overlap.
For example, Jane is 66 and still works at a full-time job. She is enrolled in both Medicare and in her employer’s health insurance plan. Because she works for a bigger company, one with more than 20 employees, her employer-based plan is considered to be her primary insurer.
That means that if Jane has an operation, her primary insurer will get the claim first and pay out the portion that is its responsibility. After that, the claim will go to Medicare, which will pay out whatever remains up to Medicare’s responsibility.
Any portion of the bill not covered by the employer’s health insurance plan and Medicare would then be the patient’s responsibility.
Here is another example: Jim is a student who has coverage through his college and through his parents’ insurance plan. In this situation, the college plan is primary and would get the claim first. Whatever is left over from the claim then would move to his parents’ plan.
Primary insurance vs secondary insurance: Who pays first?
Coordination of benefits isn’t always standard. Plans can differ, so it’s vital to talk to your employer’s benefits department and health plan if you have two health plans.
That said, here are situations when you may have more than one health plan and which one would likely be the primary insurer and which would be secondary:
|Married; both spouses have plans||Your employer||Your spouse’s employer|
|Child with two plans from married parents||Parent with earlier birthday in calendar year||Parent with later birthday|
|A child has divorced parents||Parent with custody||—|
|A child with own policy (from school or work) and still on parent’s health plan||Child’s plan||Parent’s plan|
|A child is married and on spouse’s and parent’s policies||Child’s spouse’s plan||Parent’s plan|
|A pregnant child on a parent’s plan||Child’s plan||—|
|Workers’ compensation and health insurance plan||Workers’ compensation||Health plan|
|COBRA and other insurance||Employer’s plan||COBRA|
|Medicare and a private health insurance plan||Medicare if employer has 100 or fewer employees; private insurer if more than 100 employees||Private insurer is 100 or fewer employees; Medicare if more than 100 employees|
|Veterans Administration (VA) and a private health insurance plan||Private insurer||—|
|Military coverage (TRICARE) and other health insurance||Other insurer||TRICARE except if other plan is Medicaid|
|Medicaid and other plan||Other insurer||Medicaid|
What are the pros and cons of having two health insurances?
There are both advantages and disadvantages to carrying two health insurance plans:
- You may have more coverage options when you carry two plans, which means your costs could be reduced.
- Sometimes — as with having prescription drug coverage through an employer-based plan instead of more expensive drug coverage via Medicare — the savings can be significant.
- You may have to pay premiums for two plans.
- The benefits of having two plans are usually — though not always — modest, and the cost of premiums may outweigh any benefits.
- Having two insurance plans can make the claims process more complicated, especially if you have disputes with one or both insurers.
Frequently Asked Questions
How do you determine which health insurance is primary?
Determining which health plan is primary is straightforward: “If you are covered under an employer-based plan, that is primary,” Mordo says.
If you also were covered under a spouse’s plan, that would be secondary, he adds.
In certain situations, seniors who are 65 and still working may be covered under their employer’s plan and eligible for Medicare.
“Depending on the size of the employer, Medicare can be primary or Medicare can be secondary,” Mordo says.
If the employer has 20 or more employees, the employer’s health plan will be primary, and Medicare will be secondary.
Should I consider secondary health insurance coverage?
Some people think in terms of “primary insurance vs. secondary insurance.” But the two types of insurance can complement one another.
For example, Mordo says Medicare beneficiaries can benefit from having both Medicare (including Part A and Part B) and a supplemental policy.
“There are great advantages to that because the supplemental policy picks up whatever Part A and Part B does not cover,” he says. “That is a huge savings on potential out-of-pocket cost for a Medicare beneficiary who might be on a fixed income.”
It’s also true that dual health plans can reduce your health care costs if the secondary insurance picks up some medical costs that your primary plan doesn’t cover.
However, Mordo believes the downsides of having two health insurance policies usually outweigh any benefits.
“The disadvantage is the outlay in additional premiums,” he says. “You’re paying for two plans, and the benefit is minuscule.”
Other downsides to having two health plans include:
- Having two deductibles, which you pay before the health plan kicks in its share.
- Dealing with two health companies.
- Remembering the specifics of two different types of health plans that might have different designs, such as a preferred provider organization (PPO) and health maintenance organization (HMO) plan.
- Making sure your provider and hospital knows which plan is primary and which one is secondary. Having dual coverage also might require more paperwork headaches if a health plan denies a claim or pays less than you expected.
- Staying in-network for both plans whenever possible. Some plans, such as an HMO, don’t allow out-of-network care. On the other hand, another plan like a PPO lets you get out-of-network care, but you pay more for it.
- Recalling the covered benefits for each plan. One plan may pay for a test or prescription, while another may deny it.
How do deductibles work with two insurances?
If you carry two health insurance plans and have deductibles with each plan, you’re responsible for paying both of them when you make a claim.
In other words, don’t expect that if you pay a deductible on one plan, it will eliminate your obligation for the deductible on the other plan.
Can you be covered by two health insurance plans?
Yes, you can be covered by two health insurance plans.
In some cases, each member of a couple might have health insurance through their employer. Children up to the age of 26 also might have coverage through their employer and their parents.
It is also possible for others – such as members of the military and those who are on Medicare but are still working – to have more than one form of coverage.
However, being covered by two plans is the exception to the rule. If you’re covered by one solid employer-based health insurance plan, that’s usually sufficient for most people, Mordo says.
“You’re really not getting any benefit by being covered by two different employer-based plans,” he says.
Does secondary insurance cover the primary deductible?
Typically not. If you have a deductible on one or both plans, you will need to pay those deductibles before your insurance reimburses you for care.
“Depending on the type of plan you have, there is not necessarily a pass-through or a honoring of a deductible from one plan design to the next,” Mordo says.