You can have multiple health plans, but is it worth it? 

Having two plans doesn’t mean a doctor gets reimbursed the same amount twice. It also doesn’t mean a member makes money off the dual coverage. Instead, the two plans, which are called primary and secondary, coordinate provider payments, so they don’t pay more than 100% of the costs. 

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Which health insurance company pays first? That’s where coordination of benefits (COB) comes in. 

 

What is coordination of benefits? 

When you have a primary and secondary health plan, the insurers use a framework to work together, so both health plans pay their fair share. COB decides which plan pays first (the primary plan) and which pays second (the secondary plan). 

The type of plan guides a COB. Based on the state and the size and type of plan, a state or the federal government may set up the COB regulations. Large employer plans create their own COB rules. 

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. 

Let’s look at an example. You go to the doctor and get tests that total $500. The doctor files a claim with the primary insurer, which reviews the visit and tests and pays what it owes. Let’s say that’s $300 of the bill. 

The secondary insurer then gets the bill. Like the primary insurer, the secondary payer reviews the visit and tests and figures out what it owes. Let’s say the secondary insurer picks up $200 of the bill. 

The member then gets the bill for the remaining $100. 

 

When is a health plan considered the primary insurer?

Primary vs. secondary insurers can come into play in multiple instances. Let’s take a look at a few of the more common situations and likely scenarios. 

  • A married couple -- A wife has a health plan with her employer, but her husband also includes her on his health plan. In this case, the wife’s employer will be 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 -- Medicare would be considered primary if the employer has 100 or fewer employees. A private insurer is primary if the employer has more than 100 employees. 

Find out about even more COB scenarios on our coordination of benefits page

 

Potential dual coverage pitfalls

Dual coverage can help reduce your health care costs when you need services. 

However, there are also downsides to having two health plans. You’ll have to: 

  • Pay two premiums and may have two deductibles, which you’ll have to pay before the health plan kicks in its share. 
  • Deal with two health companies.
  • Remember the specifics of two different health plans that might have different designs, such as a preferred provider organization (PPO) and health maintenance organization (HMO) plan.  
  • Make sure your provider knows which plan is primary and which one is secondary and having dual coverage may require more paperwork headaches if a health plan denies a claim or pays less than you expected. 
  • Stay in-network for both plans whenever possible. Some plans, such as an HMO, don’t allow out-of-network care, while another plan like a PPO lets you get out-of-network care, but you pay more for it. 
  • Recall the covered benefits for each plan. One plan may agree to pay for a test or prescription, while another may deny it. 

 

Deciding on dual coverage

When deciding whether to get two health plans, you’ll want to figure out the plans’ costs, deductibles and out-of-pocket costs. Then, predict how much health care services you may need over the next year. 

Having dual coverage likely won’t be worth it if you don’t expect to need many health care services, but you may find two plans could work if you forecast many out-of-pocket costs.

Deciding on dual coverage goes beyond costs, too. You’ll also want to make sure your providers are on both plans’ networks.

You may enjoy out-of-pocket cost savings if you choose to have dual coverage. However, that potential positive can be erased with cons like dealing with multiple companies, plans and policies.