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Benefits of Having 2 Health Insurance Plans

How Does Having More Than One Health Plan Work?

What Is Coordination of Benefits?

How having two health plans works.

  • Should You Keep Two Health Insurance Plans?

Understanding Coordination of Benefits System

Medicare combined with a group plan, reasonable and customary costs, you may still need to pay some costs, frequently asked questions (faqs).

The Balance / Bailey Mariner

Having access to two health plans can be good when making health care claims. Having two health plans can increase how much coverage you get. You can save money on your health care costs through what's known as the "coordination of benefits" provision. Here's what you need to know about using two health care plans and how it works.

Key Takeaways

  • Having access to two health plans can increase how much coverage and save money on your health care costs through the "coordination of benefits" provision.
  • When an insured person has two health plans, one is the main plan, and the other is the second plan.
  • In there's a claim, the primary health plan pays out first, while the second plan pays some or all of the costs the first plan didn't pay.
  • If you and your spouse or partner both have a health care plan at work, and your children are covered on both plans, the second plan can pay some of the costs the first plan didn't.

When a person is covered by two health plans , coordination of benefits is the process the insurance companies use to decide which plan will pay first and what the second plan will pay after the first plan has paid.

As an example, if your spouse or partner has a health care plan at work, and you have access to one through work as well, your children could have coverage through both plans. Once the main plan pays, rather than having to pay the rest, you could see the second plan paying some of what you would have had to pay if you didn't have it. You can use both plans to get the most out of your children's health care.

In some cases, one plan may provide better care in one area, like mental health coverage . The other plan may offer better coverage in some other area. You can get the best of two health plans when you combine care.

When an insured person has two health plans, one is the main plan, and the other is the second one. In the event of a claim, the primary health plan pays out first. The second one kicks in to pay some or all of the costs the first plan didn't pick up. Some of the health care costs to consider when deciding how to manage your health care plans are outlined below.

Your deductible is the amount you need to pay out of pocket each year before your insurance covers any of your medical costs, including appointments and prescriptions. For example, your insurance plan might have a $2,000 annual deductible, which means you need to cover the first $2,000 in costs each year before your insurance covers any expenses.

A copay —short for copayment—is an amount you pay at the time of each doctor’s appointment. Typically it's a small fee, such as $15 or $25 for your primary doctor. However, the copay might be higher for a specialist or other service.

Coinsurance

Coinsurance is a set percentage of the cost of service that you must share in paying. For example, your insurance provider might pay 80% of the cost of a service, while you'd be responsible for 20%. Coinsurance costs can be expensive if you or a family member need extensive care, such as a hospital stay or surgery.

Should You Keep Two Health Care Plans? 

If you have access to two health care plans, you could end up paying less money out of your own pocket for expenses the first plan doesn't cover. For example, if your first plan has a deductible or copay, the second plan may pay for that.

Does a person with two health care plans get double benefits? Not exactly. Having two health plans does help cover any health care costs better through the coordination of benefits provision.

If you are thinking you will save money on health insurance by only having one plan, think about how combining care works and what health care costs you have before signing a health insurance waiver and giving up a second plan. If your plan through your own job is free, and your partner can add you to their plan for a low cost, you should keep both plans.

Here's how a person may have two health care plans:

  • A child's parents each have access to a health plan at work. Children can be covered under both plans if the parents decide to include them.
  • Married couples or domestic partners who each have access to a health plan through their job may put each other on their plans.

The health plan coordination of benefits system is used to ensure both health plans pay their fair share. When both health plans combine coverage in the right way, you can avoid a duplication of benefits while still getting the health care to which you're entitled.

Health plans combine benefits by looking at which health plan is the patient's main plan and which one is the backup plan. There are guidelines set forth by the state and health plan providers that help the patient's health plans decide which health care plan is the main plan and which is the second plan.

If you have two health plans, you may be asked to declare which one you want to name as your main plan. Do your research to decide which plan will work better as your main plan.

Once you've named one plan as your first plan, that plan will pay what is required without looking at what the second plan covers. Once the main plan has paid the costs it has to pay, the second plan will be used.

Your second health plan, unlike your first plan, can look at what health care service was provided to you by the main plan. The health care costs that are still due will then be looked at for payment under the second health care plan.

If you’re 65 or older, have group health plan coverage based on your or your spouse's current employer, and it has 20 or more employees, the group plan will pay first. If they have less than 20 employees, Medicare will kick in first.

There are some rules that health plan providers follow that could cause a person covered by two plans to still have to pay for some health care costs . One such area is the "reasonable and customary" amount.

Most health plans will only cover costs that are reasonable and customary. In other words, the health plan provider will not pay for any services or supplies that are being billed at a cost that is more than what is the usual charge for the treatment in the area where the treatment takes place.

Once your main plan pays the reasonable and customary amount on a health care service, there may still be a balance due. This could happen if the health care provider was charging more than what the main plan felt was reasonable and customary.

The second plan does not have to pay the amount the first plan did not pay if the charge is deemed out of the normal limit. The insured person could still end up paying out-of-pocket. This could still happen even if there are two health plans.

What's more, neither health care plan will cover the cost of a service that is not covered under their health care plans. If both plans do not cover a certain test, for example, the second one doesn't have to pay after the first one denies the expense.

People with more than one health care plan should discuss with their health plan providers how combining plans will work with their plans. This way, they can see what health care coverage they can expect.

If you have two insurances, will you have a copay?

If you have two health insurance plans, the second may pick up any copayments or additional costs that were not covered by your primary insurance. Your copay may or may not be covered. So, be sure to check with each of your insurance plans.

Will I lose my Medicaid when I am eligible for Medicare?

No, Medicaid and Medicare work together well, and between the two, most of your costs should be completely covered. Some states even offer Medicaid-Medicare plans that offer more coverage options.

National Association of Insurance Commissioners. " Using Your Health Plan ," Page 17.

Nebraska.gov. " Title 210 - Nebraska Department of Insurance: Chapter 39 - Coordination of Benefits Regulation ," Pages 24-26.

Nebraska.gov. " Title 210 - Nebraska Department of Insurance: Chapter 39 - Coordination of Benefits Regulation ," Pages 14, 18.

Nebraska.gov. " Title 210 - Nebraska Department of Insurance: Chapter 39 - Coordination of Benefits Regulation ," Page 1.

Nebraska.gov. " Title 210 - Nebraska Department of Insurance: Chapter 39 - Coordination of Benefits Regulation ," Page 17.

Centers for Medicare & Medicaid Services. " Medicare & Other Health Benefits: Your Guide to Who Pays First ," Pages 6, 12-13.

New York State. " Usual and Customary or Reasonable Fees for Health Insurance Reimbursements ."

National Association of Insurance Commissioners. " Coordination of Benefits Model Regulation ," Pages 120–1-120–2.

Medicare. " Medicaid ."

What is Coordination of Benefits? Making Sense of Overlapping Health Policies

coordination of benefits example

What is the Coordination of Benefits in Health Insurance? 

Coordination of healthcare benefits refers to determining how multiple health insurance plans work together to cover a person’s medical expenses, ensuring that total payments do not exceed the actual cost of care.

Coordination of benefits (COB) must occur when a person holds multiple health insurance policies. If you have two plans, your insurers coordinate to determine which policy is the primary and which is the secondary. Coordination of benefits helps avoid duplicate expenses and keeps healthcare and prescription costs affordable for all policyholders .

Table of Contents

How common is double coverage.

Healthcare can be complex, and some people may need to enroll in multiple healthcare plans to cover all of their medical needs. It also may come as a matter of convince if both your and spouse have employer-provided care. 

Dual coverage through Medicare and a private or group insurer is especially common. More than half of  seniors age 65 or older  in the U.S. in 2021 held more than one health insurance policy, compared to only 6% of adults aged 19-64 that same year. 

Dual benefits are common among the following groups:

  • Working couples who each have employer-sponsored health insurance
  • People who are still working but are eligible for Medicare
  • Someone who holds private insurance and is eligible for Medicaid
  • A young adult who is on their parent’s insurance and an employer-provided plan

How Does the Coordination of Benefits Work?

COB applies to dual group coverage, Medicare and Medicaid , extended coverage such as COBRA , or dependent coverage when combined with another healthcare plan.

The coordination of benefits still largely follows the guidelines set by the National Association of Insurance Commissioners (NAIC) in 1971 including identifying a primary and secondary plan and using the “ birthday rule ” to cover dependents with double coverage. The birthday rule is for dependents who have coverage from both parents: the parent with the earlier birthday is the primary coverage, and the other parent is the secondary. 

Eligibility

You will experience coordination of benefits if you hold two different insurance plans. Eligibility for COB requires you to keep up on premiums for both plans. Additionally, you must adhere to each policy’s individual deductible, copay , and coinsurance terms. Always confirm your eligibility for each of the respective plans with an insurance agent. 

How Is the Primary Payer Determined?

coordination of benefits example

The process of coordination of benefits follows certain universal guidelines to determine a primary and secondary plan. 

For example, Medicare typically acts as the primary payer if combined with another type of insurance, and the birthday rule applies to two employer-funded plans. Your healthcare provider can bill your secondary plan to pay the remainder of medical costs only after the primary plan pays its share. 

The rules on which insurer becomes the primary payer vary by situation, so it’s good practice to carefully review your policy terms and seek help if you need clarification. Understanding your coordination of benefits will ensure your healthcare costs are covered.

When Is the Coordination of Benefits Necessary?

The following are among the most common scenarios requiring coordination of benefits:

  • You have employer-sponsored health insurance and are also covered by your spouse’s employer-sponsored plan
  • You have health insurance through a private insurer and are also covered by your spouse’s group health insurance plan
  • You and your spouse’s plans both cover your dependent child or children
  • You receive Medicare and are also insured through your current employer   

Each scenario will have different ways of establishing the primary and secondary plans. It often looks like the examples below. 

The Methods of COB

A COB “method” is used to determine how your primary and secondary plans will share the costs of your medical coverage.

Full Method

Under the full method, the primary payer covers the claim as if you have no other insurance and applies the costs toward your deductible. After the primary payer has paid its part, the secondary payer determines its share of other out-of-pocket expenses, such as copays or coinsurance. Together, the two plans pay most or all of what your medical care costs. 

Non Duplication Method

The non duplication method requires the secondary payer to review claims paid by the primary payer. If the amount paid by the primary payer is equal to or more than the amount owed by the secondary payer, the secondary plan does not pay. However, the secondary plan will pay for applicable costs that the primary payer did not cover. 

Traditional

The traditional method of COB combines the coverage of multiple insurance policies to cover 100% of expenses. This process may require your insurers to work together to decide which will cover certain benefits on a case-by-case basis while still relying on select guidelines like the birthday rule. 

The Rules Around the Coordination of Benefits

coordination of benefits example

Several ground rules exist to help govern coordination of benefits, explained below. If neither plan includes coordination of benefit rules, the plan providing coverage for a longer period pays first.  

  • Employer-sponsored plans : Generally, your employer is the primary payer of your healthcare expenses, and your spouse’s plan is secondary if you both are enrolled in an employer health plan. 
  • Medicare and Medicaid : Medicare acts as the primary payer if the other insurer is a business employing less than 100 people but is the secondary payer to the insurer of a large company. Medicaid typically only pays after the other insurer covers most of the costs.
  • Private health insurance plan and Veterans Administration (VA) benefits : The VA charges health insurance providers for care and services instead of offering traditional health insurance coverage and does not offer secondary benefits. Your private health insurance would be the sole primary payer in this case.
  • Workers’ compensation : If you receive both worker’s comp and traditional health insurance coverage, worker’s comp benefits always pay first, followed by your health insurance plan.
  • Military coverage ( TRICARE ):  You may only have TRICARE coverage and no other health insurance benefits if you are on active duty; however, TRICARE is considered secondary to all other health plans, except Medicaid, for non-active-duty military service members. 

Determining Out-of-Pocket Costs

Insurers must determine how out-of-pocket costs are paid through COB. This process depends on whether your plans use the full COB method or the non duplication COB method. One of your insurers may cover out-of-pocket costs such as copays or coinsurance that remain after paying for services rendered.

Out-of-pocket costs include copays, or a set fee for doctor visits or prescriptions. Your secondary plan may pay copay costs after your primary plan applies its payment toward the deductible. Coordination of benefits must also be applied to other out-of-pocket expenses such as coinsurance or out-of-network providers, facilities, or prescription drugs.   

coordination of benefits example

COB In Action

Your insurers must coordinate benefits if you have multiple health insurance plans. Common scenarios requiring COB include spouses with respective employer-sponsored plans, Medicare beneficiaries still working and receiving group healthcare benefits, and adults up to age 26 who buy their own coverage but also remain on their parent’s plan.

Insurers use various methods and rules to determine the primary and secondary plans. You should review your policies and speak with an expert to ensure you understand your coordination of benefits. 

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Coordination of Benefits: Everything You Need to Know

COB, or coordination of benefits, occurs when an individual is in possession of more than one insurance policy and it comes to processing a claim. 4 min read updated on February 01, 2023

Also referred to as COB, coordination of benefits occurs when an individual is in possession of more than one insurance policy and when it comes to processing a claim, the policies are assessed to determine which will be assigned with the primary responsibility for covering the predominant share of the claim costs.The process also involves assessing the extent that other policies held will contribute toward the claim. This article will provide you with everything that you need to know about coordination of benefits.

What Is Coordination of Benefits?

The primary intentions of coordination of benefits are to make sure that individuals who receive coverage from two or more plans will receive their complete benefit entitlement and to prevent benefits from being duplicated when an individual has more than one policy in place. This process covers insurance pertaining to several sectors including health insurance, car insurance, retirement benefits, workers compensation, and others.

The order in which the insurance policies are coordinated is dictated by insurance law and cannot be decided by a company or an individual. This process takes place only when multiple insurance plans are involved. If only one plan is held, then all responsibility is put onto the sole plan.

Predominantly, coordination of benefits happens when an individual has two plans in place (primary and secondary), but it may also include a tertiary plan in some circumstances. The primary insurance plan is given the responsibility of being the first payer, the secondary plan is the second payer, and so on depending on how many plans the individual holds.

Why Is COB Important?

There are numerous reasons why COB is an important process. These are summarized below:

  • A lack of coordination between the plans a person holds can result in the claim not being paid until the COB has been confirmed, thus potentially causing financial difficulties.
  • Either the individual or the insurance provider could be subjected to expenses that they did not need to pay if the insurance plans are not coordinated correctly.

Order of Benefit Determination

The primary plan is always considered as the predominant provider of benefits, and it must provide these as though the claim holder does not have a second or third policy in place. The COB provisions that are specified in the insurance policy outline which plan is the primary plan. Once identified, the primary plan's benefits are applied to the claim first.

It is important to note that the primary plan is always considered as the first payer, regardless of the specifics written in its clauses. This means that any plan that does not include the COB provisional clause may not incorporate the benefits offered by a claimant's other plan into their considerations when assessing what benefits are due.

Any unpaid balance owed to the patient is typically paid by the claimant's second plan, within the limits of its responsibility. This secondary insurance plan can take the benefits of the patient's other plans into consideration only when it has been confirmed as being the secondary — not primary — plan.

The payments that are delivered to the patient by their combined insurance plans do not exceed 100 percent of the charges for necessary covered services. The benefits are usually coordinated between all of the plans held by the patient.

If a family is making a claim, each individual and their COB will be assessed separately, as there is a possibility that the order of plans and benefits may differ between each member.

There may be some differences to the "order of benefit determination" as laid out here if the claimant's policy is held with Medicare, but otherwise, these rules should be followed as a standard process.

Understanding Various COB Rules

Common COB circumstances and how the COB rules are then applied are outlined below.

  • Plan Type Rule If the individual has both a commercial insurance plan and Medicaid, then the commercial plan will always be considered as the primary policy, and Medicaid is secondary.
  • Subscriber or Dependent Rule If a patient subscribes to two or more policies, where one policy is as a subscriber, and another is as a dependent, then the policy under which they are classified as a subscriber is the primary policy, and that where they are a dependent will fall as the secondary policy.
  • Timeline Rule If the patient is the primary subscriber to two commercial plans, then the plan to which they have been subscribed the longest is considered as the primary plan, and the newer plan is the secondary.
  • Employer Coverage Rule If the individual has coverage both through their employer and as a dependent through another commercial plan, then the employer-operated plan will always be considered as the primary plan.
  • 1. The birthday rule of the parent (whoever's occurs earlier in the year) and,
  • 2. The length of policy rule of the policy holders (whichever commenced first).
  • Dependent Child (Parents Not Separated or Divorced) Rule If a child's parents are together, then determining the primary plan is done by using the birthday rule (i.e. whoever was born earlier is responsible).

If you are currently processing an insurance claim, and you are unsure of the correct process to follow as per COB, then you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top five percent of lawyers to its site, and these professionals come from schools such as Harvard Law or Yale. Our lawyers have an average of 14 years of legal experience, which includes working with prestigious companies like Google and Airbnb.

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What is coordination of benefits (COB)?

Providers are exceptional at providing care. If there is one area that they find challenging, it is medical billing. With so many regulations and codes, a myriad of jargon and rules could confuse anyone. Coordination of Benefits (COB) is another terminology used in healthcare. In this article, we will walk you through the meaning of coordination of benefits and the process and rules involved.  

What is Coordination of Benefits?  

Coordination of Benefits (COB) is a process to streamline medical billing services . It helps avoid duplication of coverage and overpayment. Some patients may have more than one source of health insurance coverage. Coordination of benefits (COB) helps healthcare insurance providers determine their payment responsibilities or the percentage a plan contributes to the range if there is more than one payment plan. Simply put, coordination of benefits helps payers determine which health insurance plans are primary and which are secondary. Naturally, the primary health insurance plan pays first. If there are any additional expenses that need to be covered, then the secondary health insurance plan provides extra coverage. In this case, there is still some coverage left after using the secondary and primary healthcare plans; the patient pays out of pocket for those expenses. The term “covered services” refers to the medical treatment, supplies, labor, or medications that insurers offer as part of the benefits of their plans.  

Why is Coordination of Benefits Important?  

Coordination of Benefits (COB) is necessary when an individual is signed up on two plans. Some common examples for requesting coordination of benefits are:   

  • When an individual is under 26 and under their parent’s plan and covered by their employer’s policy.    
  • When a person has a marketplace plan as well as an additional plan.   
  • When more than one guardian or parent covers a child.   
  • When an individual is covered under their spouse’s plan as well as their employer’s policy.   
  • When an individual has Medicare or Medicaid and is covered by a commercial insurance plan.    

Care coordination  helps ensure that the medical billing process is easier for patients. When a patient requests coordination of benefits, the primary insurance provider will take care of the treatment expenses first. As stated before, if there are any other expenses, they will be taken care of by the secondary provider. This ensures that there is no way to receive double benefits from more than one insurance company. It helps reduce the cost of insurance premiums and avoid any situation where the patient has to pay out of pocket due to a lack of coordination between payers. Using coordination of benefits also allows providers to determine which policy should be billed, primary or secondary.    

Coordination of Benefits Rules  

The rules for Coordination of Benefits (COB) vary depends on the place you live, the state you are listed in and most importantly, the type and size of your insurance plans. Some employers may have their own rules set. However, there are some rules that are common:  

  • If a patient has more than one health insurance provider, CMS only pays the remaining payable amount. Depending on the situation. Medicare can even be a primary or secondary payer. If the other provider is a small business, it can be the primary provider too.  
  • When it comes to the case of spouses, spouses can have separate insurance plans as well. In such a situation, your employer’s insurance policy would become the primary plan and your spouse payer will be secondary.  
  • Veterans Administration (VA) is not considered a health insurance plan by CMS. They submit claims for supplies, prescriptions, services, and treatment to public or commercial health insurance companies. If you have VA plan, you must rely on your spouse’s medical insurance plan as your plan.  
  • If an employee is covered by an employer, then their compensation package becomes primary and any other payer, whether Medicare or any other insurance company, becomes secondary.  
  • Military coverage is a secondary healthcare plan. It is the primary payer for the Tricare Supplement, certain federal government programs, and state crime compensation programs. If a member of the military is injured, military coverage is the only alternative available to them.  

Conclusion  

In the intricate world of outsource medical billing , coordination of benefits stands as a crucial process for ensuring fair and efficient payment processes. IT contributes to a more streamlined and cost-effective healthcare system. Coordination of benefits is a part of a complicated medical billing process. CareCloud provides efficient medical billing services that helps providers navigate through the medical billing landscape and maximize reimbursements.

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Coordination of Benefits (COB): What Is It & How Does It Work? 

In today’s diverse healthcare landscape, someone may opt for additional health insurance plans for various reasons, from access to a broader network of providers to help with reducing healthcare costs.

However, navigating benefits across multiple insurance plans can be tricky. That’s where coordination of benefits (COB) comes in. COB rules determine how multiple health insurance plans work together to pay an insurance claim for one person.

What is coordination of benefits?

Coordination of benefits is the process insurance companies use to determine how to cover your medical expenses when you’re covered by more than one health insurance plan. It clarifies who pays what by determining which plan is the primary payer and which is secondary. It also ensures proper claim processing and helps avoid overpayment or duplicate payments.

How does coordination of benefits work?

When a person has multiple insurance plans, COB rules determine the order in which the insurance plans will pay for covered services. The primary plan is responsible for processing the claim first and paying its share of the coverage amount. The secondary plan would then review the claim and pay the remaining balance within its coverage limits.

For example, suppose you visit your doctor and get billed $250 for the appointment. Your primary health plan may cover the majority of the bill. Let’s say, for example, that’s $200. Then your secondary plan would pay the remaining $50.

To prevent overpayment or duplication, plans will not pay more than 100% of the cost of the medical service(s), meaning that the combined benefits shouldn’t surpass the total cost of the treatment.

You may also be responsible for deductibles , copayments , and coinsurance.

Coordination of benefits examples

There are various scenarios in which someone might have two health insurance plans . Here are some everyday situations and how to determine which plan is most likely to be the primary or secondary payer.

Coordination of benefits rules

COB rules help organize and manage healthcare benefits and costs. Keep in mind that COB rules can vary depending on several factors, including the insurance company, the specific insurance plans involved, and the state you live in. Refer to the plan rules outlined in your policy and consult with your providers.

In general, the following COB rules will typically apply.

Policyholder or dependent rule

The plan for which you are enrolled as an employee or main policyholder will be the primary payer. The plan for which you’re enrolled as a dependent, such as a spouse’s plan, would be the secondary payer.

Birthday rule

This rule determines the order of coverage for children when both parents have health insurance. It places primary responsibility on the parent whose birthday falls earlier in the calendar year. The plan of the parent with the later birthday would have secondary responsibility.

Custodial parent rule

If parents are divorced or separated, the primary payer for dependent children would be the parent with child custody . However, if parents share joint custody, the order of benefits will typically follow the birthday rule.

Continuation coverage rule

If you have continuation coverage — such as the Consolidated Omnibus Budget Reconciliation Act (COBRA) — and coverage from another plan, the benefits of the plan covering you as a member or employee are primary. Your continuation coverage would be secondary.

Medicaid and Medicare rule

Let’s say you have coverage under a government program like Medicaid and Medicare in addition to other health or drug coverage. In that case, determining primary or secondary responsibility will depend on a number of factors. Factors can include your age, the size of the company you have employer coverage with, and other considerations. Check your insurance policy and coverage details or consult with your employer to determine what the order of coverage should be.

Timeline rule

If none of the above provisions determines which plan is primary, then the plan you've been enrolled in the longest is typically considered the primary one.

Potential drawbacks of using COB

Having multiple health insurance plans and coordinating benefits can be useful in the right situation, but in certain circumstances, the disadvantages of COB may outweigh the advantages. Here are some reasons why having multiple insurance plans and using COB may not be a favorable choice: Administrative complexity : Managing multiple plans and navigating COB can come with extra burdens, such as additional paperwork, coordination with multiple providers, and understanding the details of each plan’s rules and coverage.   Cost considerations: Maintaining more than one plan may not be a cost-effective choice if the combined premiums , deductible copayments, and coinsurance outweigh the benefits received.

Before enrolling in multiple health plans, analyze the cost-benefits and carefully review your coverage details to avoid surprises. Consult with your insurance provider(s) to determine the best approach for your unique situation.

Time to Enroll in a New Insurance Plan? 

Related reads.

1 “Is Medicare Primary or Secondary?” Medicare FAQ, 2023. 

IntelyCare for Healthcare Facilities > Resources > Compliance and CMS Ratings > What Is Coordination of Benefits? Explanation and FAQ

What Is Coordination of Benefits? Explanation and FAQ

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Healthcare facilities sometimes provide care for patients that are on multiple insurance plans. In these instances, it’s important to figure out which entity is paying for what costs in order to avoid any hiccups in billing. This process as a whole is formally known as coordination of benefits . So, you may be wondering, What is coordination of benefits and who’s responsible for it?

In this FAQ, we explain everything you need to know. By understanding what this process entails, you can stay on the forefront of keeping your staff well-informed .

Coordination of Benefits: Definition

Individuals in the U.S. are allowed to be covered by more than one health insurance plan at a time, typically among spouses. To determine how coverage is split for these patients, insurers follow the coordination of benefits (or COB) process, which broadly refers to how these insurers decide who pays for a patient’s care first.

What Is Coordination of Benefits Like in Practice?

The exact process of coordinating benefits can vary depending on the types of insurance an individual has. At baseline, insurance providers work together to establish who the primary and secondary payer for a patient is.

  • The primary payer is the first to pay for any of the patient’s covered services, according to the benefits outlined in their plan.
  • The secondary payer is the next to pay for any remaining costs, according to what they should cover in their plan.

After a primary and secondary payer are established, insurance providers will usually specify these rules in their coverage plans. This helps healthcare staff understand how to start the billing process and gives patients more transparency on what costs will be shared.

Coordination of Benefits Example

To understand how benefit coordination applies in practice, we can look at a simplified example:

  • A patient has a medical bill totalling $100.
  • A claim is first submitted to the primary payer/insurer, who is responsible for $80, based on their coverage plan.
  • Afterwards, a claim is submitted to the secondary payer/insurer, who calculates how much of the remaining $20 they should cover, based on their plan details.
  • The patient then pays for any remaining, out-of-pocket expenses.

What Is Coordination of Benefits’ Importance?

Coordination of benefits in medical billing can help streamline the process of submitting claims. Lack of coordination can lead to confusion for insurers, facilities, and patients since there’s no clear system dictating how costs are split. Establishing a primary and secondary payer ensures that:

  • The total coverage between plans does not exceed the total cost of care.
  • Covered medical services are not paid for twice by different insurers.
  • Errors are avoided throughout the administrative billing process.
  • The patient does not overpay due to miscalculated out of pocket costs.
  • One insurer is not bearing significantly more costs than another.

What Are the Rules Around Coordinating Benefits?

There are various scenarios in which a patient may have more than one insurance plan. In some cases, legal rules can automatically apply to determine the primary payer. Common coordination of benefits rules include:

  • Private and public plans — Some people have both private and public (government-sponsored) health plans. In these instances, the private plan will generally pay first.
  • Dependent children — Children can sometimes be covered by insurance plans provided by both of their parents’ employers. The parent with the earlier birthday will have their plan pay first.
  • Employer-sponsored health plans — Some individuals may purchase a commercial plan on top of a plan provided by their employer. The employer-sponsored plan will generally be the primary payer.
  • Dual coverage with spouses — Individuals can sometimes elect to be covered by both their own employer’s plan and their spouse’s employer plan. In this case, a person’s own employer plan would be the primary payer while their spouse’s plan would be secondary.
  • Medicare and Medicaid — Some individuals over the age of 65 may have both Medicare and Medicaid. For these individuals, Medicare will serve as the primary payer.
  • Consolidated Omnibus Budget Reconciliation Act (COBRA) — Individuals may have COBRA coverage from a previous employer as well as a current employer-subsidized health plan. The most current employer-health plan will serve as the primary payer.

Who Is Responsible for Coordinating Benefits?

Insurance companies are primarily responsible for coordinating their benefits, and certain aspects of this process are regulated by federal and state laws. The National Association of Insurance Commissioners (NAIC) and The Centers for Medicare and Medicaid Services (CMS) provide guidelines that insurance companies should follow.

It’s also important for healthcare facilities to stay aware of policies surrounding this process. Not only does this allow for stronger oversight of the administrative billing process, but this also enables proper education for staff and patients who are working with multiple insurers.

Keep Up With the Latest Policies Impacting Your Facility

Now that you know the fundamentals to answering the question, “What is coordination of benefits?” you may be wondering what other policies can affect your patients and staff. Sign up to receive all of our latest healthcare news and insights today.

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Coordination of Benefits

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Quick links, what happens if i am enrolled on the student health insurance plan and another health plan.

The Student Health Insurance Plan is almost always the secondary payor when you are enrolled in two health plans. This means that claims will need to be submitted to your other health plan first before being submitted to the Student Health Insurance Plan, even if you know your primary plan will deny the services.

If you have more than one medical or dental plan, you are required to provide this information for your plans to work together, so your claims can be processed correctly and you can get the most out of your coverage. This process is referred to as Coordination of Benefits.

Your health insurance benefits will need to be coordinated if:

  • You are enrolled on the Student Health Insurance Plan and any other health plan. Examples of other insurance could include a parent’s plan, a spouse’s plan, and/or a government-sponsored plan like Medicare or Medicaid.
  • A dependent is enrolled on the Student Health Insurance Plan and enrolled on another health plan.
  • You receive care as the result of an automobile accident or an injury that occurred at work.

Blue Cross Blue Shield of Massachusetts can retract payment on claims that should have been submitted to another insurance plan first. To avoid any claims issues, please notify your providers (doctors, hospitals, labs, etc.) of both plans. Please contact Blue Cross Blue Shield Coordination of Benefits at (888) 799-1888 for more information.

Example of how Coordination of Benefits works:

Erika is scheduled for an MRI at a low-cost share facility in Boston. She’s enrolled on her parent’s health plan in addition to the Student Health Insurance Plan. Her parent’s plan is an HMO based out of California. Her California health plan does not cover planned care out-of-state.

Even though Erika’s primary insurance (HMO of California) will not cover the MRI in Boston, the MRI still needs to get billed to her parent’s plan first.

*Erika’s primary plan does not cover planned care outside of MA. Because of this, they did not pay any portion of the costs. After receiving the denial, her provider submitted the charges to her secondary plan (Harvard University Student Health Insurance Plan). Her secondary plan paid the contracted rate for the services, and she was left liable for her copayment.

If the claim was submitted to her secondary plan first and her secondary plan incorrectly paid the charges, they can retract their initial payment on the claim. The provider would send Erika the bill for the full charges.

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Dental Plans - Coordination of Benefits

One area of dental benefits that can cause some confusion is coordination of benefits (COB). COB takes place when a patient has more than one dental plan and is able to use both of them to cover their dental procedures. When this occurs, the two plans work together to coordinate benefits to eliminate over-billing or duplication of benefits.

What happens when both plans have COB provisions?

  • The primary plan is the one in which the patient is enrolled as an employee or as the main policyholder.
  • The secondary plan is the one in which the patient is enrolled as a dependent.
  • State laws and regulations often mandate coordination of benefits, but plan sponsors should be certain that the selected plan specifies its method of coordination.

How does COB work with dependents?

  • The policy that pays first for dependents depends on the rules of the insurance company or state laws.
  • The typical protocol for dependents whose parents have overlapping coverage is to follow the birthday rule: The parent whose birthday is earlier in the calendar year is primary.
  • In the case of divorced/separated parents, the court’s decree would take precedence.

When does the secondary policy pay?

  • Usually, the secondary policy will not accept a claim until after the primary claim is paid, and then the secondary policy will often require a copy of that payment information (referred to as an explanation of benefits, or EOB).
  • In addition, state laws and regulations often mandate coordination of benefits.
  • Plan sponsors should be certain that the plan they select specifies its method for coordinating benefits with other plans.

ADA Guidance on Coordination of Benefits (PDF) can be downloaded online. The ADA recommends that patients impacted by these policies consult with their human resources department to determine their entitled level of benefit prior to treatment.

You may download the entire publication, Dental Benefits: An Introduction , which also includes information about understanding different types of dental plans, communicating with third-party payers and more.

If you are not an ADA member, you can purchase this whitepaper in the ADA Store.

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Coordination of Benefits (COB)

The X12 837 HIPAA Technical Reports Type 3 (TR3s) adopted as the national standard for provider electronic submission of health care claims to payers such as Medicare also contains the requirements for electronic transfer of claims from Medicare to another payer. See the Medicare Claims Processing Manual, (IOM Pub.100-04), Chapter 24 for more information on the 837 COB claims transaction. Information concerning the Medicare Coordination of Benefits (COB)/Coordination of Benefits Agreement (COBA) claims crossover process may be referenced in the Medicare Claims Processing Manual (IOM Pub.100-4), Chapter 28, Section 70.6 and successive sections. Additional information about the COBA crossover process is available.

HIPAA TR3s can be purchased at the official Washington Publishing Company (WPC) website.

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COORDINATION OF BENEFITS: NON-DUPLICATION PLANS

coordination of benefits example

Today we’re chatting about one of the more confusing aspects of dental billing: coordination of benefits surrounding patients with primary and secondary coverage where the secondary plan is non-duplication.

What is coordination of benefits or COB? 

COB, short for coordination of benefits , is when the patient is covered by more than one benefit  plan (dual coverage) and the two benefit plans are coordinated so that no more than 100 percent of the total covered expense of any treatment is paid. For example, the patient has coverage with their employer’s plan and their spouse may have also elected dependent dental coverage for you under his or her employer’s plan. With dual coverage, the respective carriers must coordinate benefits paid so that benefits do not exceed the total cost of the treatment.    

How does dual coverage work?  

Dual coverage doesn’t necessarily mean that your patient’s benefits are doubled. Dual coverage works the same way whether the patient is covered by the same insurance carrier (Cigna/Cigna) or by different insurance carriers (Cigna/Metlife). One insurance simply works with the other insurance to coordinate benefits paid. 

Here are a few examples: 

  • Family has dual coverage . Who pays first? Who pays second? One plan is identified as the primary carrier, the plan that pays first, and the other is identified as the secondary carrier, the one that pays second. Generally, the primary carrier is the plan that covers the patient as a primary enrollee (the patient’s employer’s plan rather than the spouse’s employer’s plan). 
  • If the patient is the primary enrollee for both plans , the plan that has covered you longer is considered primary. There are variances (for laid off and retired employees, for example). 
  • For dependent children’s coverage , the primary carrier is generally determined by the birthday rule: The benefit plan of the parent whose birthday (month and day, not year) comes first in the year is considered to be your children’s primary coverage. The birthday rule may be superseded by a divorce agreement or other court ruling. For example, if the father’s birthday is March 22 and the mother’s birthday is March 5, the mother’s plan is identified as the primary carrier and the father’s plan is identified as the secondary carrier. If both parents have the same birthday, then the plan that has been effective for a longer period of time will be the primary plan. For example, if the father has been covered under his plan for 10 years and the mother has been covered under her plan for two years, the father’s would be the primary plan and the mother’s would be the secondary plan. If the parents are separated or divorced, and two or more plans cover the same child as a dependent, the order of benefit determination is as follows (unless a court decree states differently; please see your certificate of coverage or benefits booklet for specific details): 1. The plan of the parent with custody of the child 2. The plan of the spouse of the parent with custody of the child 3. The plan of the parent not having custody of the child

What is a “ Carve out clause” or non duplication of benefits plan?

A “carve out clause” is a contractual term more commonly known as a non-duplication of benefits. There is standard coordination of benefits and there is non-duplication of benefits which is the focus of our Tuesday Tip. Non-duplication of benefits defines how secondary insurance pays after the primary has paid their portion of the claim. Have you ever seen the remark: “payment has been reduced by primary carriers payment and exceeds the allowable amount”?   This remark indicates that the secondary plan is non-duplication and that the primary payment is equal or greater than what the secondary would have paid. In this scenario, the secondary will not make any additional payments towards the claim as the primary has paid in full. If the both plans are in-network, any additional balance on the ledger must be written off as an adjustment. If the primary plan pays under UCR fees and the secondary is in-network, you are not required to adjust the ledger to your in-network fee. You would adjust the balance to reflect the remaining patient portion on the secondary. 

Why not twice as many benefits? 

Dual coverage limitations, like all other program limitations, are built into a group’s contract and into the rates a group pays for your coverage. These contracts are set up to provide affordable dental care to a maximum number of people. Given the choice between doubling one individual’s benefits or providing a greater scope of benefits to more people in the group, most group purchasers choose to spread their benefit dollars more evenly Still have questions about coordinations of benefits and non-duplication plans?  Feel free to reach out!

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Example 03: Coordination of Benefits (COB)

Coordination of benefits; patient is not the subscriber; payers are commercial health insurance companies. Patient and subscriber have same primary policy number. Claim submitted to primary insurer with information pertaining to the secondary payer.

SUBSCRIBER FOR PAYER A: Jane Smith

ADDRESS: 236 N. Main St., Miami, Fl 33413

TELEPHONE NUMBER: 305-555-1111

DOB: 05/01/43

EMPLOYER: Acme, Inc.

PAYER A ID NUMBER: JS00111223333

SSN: 111-22-3333

SUBSCRIBER FOR PAYER B: Jack Smith

DOB: 10/22/43

EMPLOYER: Telecom of Florida

PAYER B ID NUMBER: T55TY666

SSN: 222-33-4444

PATIENT: Ted Smith

DOB: 05/01/73

PAYER A ID NUMBER: JS01111223333

PAYER B ID NUMBER: T55TY666-01

SSN: SSN: 000-22-1111

DESTINATION PAYER A: Key Insurance Company

PAYER ADDRESS: 3333 Ocean St., South Miami, FL, 33000

PAYER A ID NUMBER: (TIN) 999996666

RECEIVER FOR PAYER A: XYZ REPRICER

EDI #: 66783JJT

RECEIVER: Alliance Health and Life Insurance Company (AHLIC),

DESTINATION PAYER B (RECEIVER): Great Prairies Health

PAYER B ADDRESS: 4456 South Shore Blvd., Chicago, IL 44444

PAYER B ID NUMBER: 567890

EDI #: 567890

BILLING PROVIDER/SENDER: Dr. Ben Kildare

ADDRESS: 234 Seaway St, Miami, FL, 33111

PAYER A ID NUMBER: KA6663

PAYER B ID NUMBER: 88877

TIN: 999996666

EDI # FOR RECEIVER A: TGJ23

EDI # FOR PAYER B: 12EEER000TY

PAY-TO PROVIDER: Kildare Associates,

ADDRESS: 2345 Ocean Blvd, Miami, Fl 33111

PAYER A ID NUMBER: 99878ABA

PAYER B ID NUMBER: EX7777

TIN: 581234567

RENDERING PROVIDER: Dr. Ben Kildare

PATIENT ACCOUNT NUMBER: 26407789

CASE: Patient came to office for routine hyperlipidemia check. DOS=10/03/05,

POS=Office; Patient also complained of hay fever and heart burn.

SERVICES RENDERED: Patient received injection for hyperlipidemia and hay fever.

CHARGES: Patient was charged for office visit ($43.00), and two injections ($15.00 and $21.04).

ELECTRONIC PATH: The billing provider (sender) transmits the claim to Payer A (receiver) (Example 3.A) who adjudicates the claim. Payer A transmits back an 835 to the billing provider.The billing provider then submits a second claim to Payer B (receiver) (Example 3.B).

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  1. Coordination of Benefits for Group Plan Members

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  2. 50 Expert Tips for Mastering Medicare Benefits Coordination 2023

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  3. How Is the Coordination of Benefits Process Best Described

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  4. Coordination Of Benefits Letter To Patient

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  5. Coordination of Benefits

    coordination of benefits example

  6. Coordination of Benefits

    coordination of benefits example

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  1. SPECIFIC COORDINATION

COMMENTS

  1. Health insurance: How coordination of benefits works

    Health Insurance Coordination of benefits: Benefits of having two health insurance plans Some people are covered by two health insurance plans, which is called coordination of benefits (COB). If you have two plans, one will be primary and one will be secondary. Written by: Nupur Gambhir | Reviewed by: John McCormick | Updated on March 17, 2023

  2. Coordination of Benefits

    Coordination of benefits (COB) allows plans that provide health and/or prescription coverage for a person with Medicare to determine their respective payment responsibilities (i.e., determine which insurance plan has the primary payment responsibility and the extent to which the other plans will contribute when an individual is covered by more t...

  3. What is Coordination of Benefits & How Does it Work?

    What is Coordination of Benefits (COB)? When a person is covered by two health plans, coordination of benefits is the process the insurance companies use to decide which plan will pay first for covered medical services or prescription drugs and what the second plan will pay after the first plan has paid. Why is Coordination of Benefits important?

  4. Coordination of Benefits With Multiple Insurance Plans

    As an example, if your spouse or partner has a health care plan at work, and you have access to one through work as well, your children could have coverage through both plans. Once the main plan pays, rather than having to pay the rest, you could see the second plan paying some of what you would have had to pay if you didn't have it.

  5. PDF Coordination of Benefits.

    Your name Your health or drug plan's name and address Your health or drug plan's policy number The date coverage was added, changed, or stopped, and why Also, tell your doctor and other health care providers about your health or drug coverage changes the next time you get care.

  6. Coordination of Benefits: Your Dual-Coverage Guide

    Coordination of healthcare benefits refers to determining how multiple health insurance plans work together to cover a person's medical expenses, ensuring that total payments do not exceed the actual cost of care. Coordination of benefits (COB) must occur when a person holds multiple health insurance policies.

  7. How Does Coordination of Benefits Work?

    For example, your secondary health insurance may pay for you to visit an out-of-network doctor if your primary health insurance is an HMO. Be prepared to submit paperwork for both of your insurance policies when you visit the doctor's office. Having two forms of insurance comes with a few downsides.

  8. Coordination of Benefits: Everything You Need to Know

    Understanding Various COB Rules Common COB circumstances and how the COB rules are then applied are outlined below. Plan Type Rule If the individual has both a commercial insurance plan and Medicaid, then the commercial plan will always be considered as the primary policy, and Medicaid is secondary. Subscriber or Dependent Rule

  9. Coordination of Benefits

    Example #1 Josie incurred medical expenses in the amount of $100. Both health plans considered the allowable expense to be $80 payable at 80%. Deductibles have been satisfied for both plans. Example #2 Thomas incurred medical expenses in the amount of $100. The primary plan allowed $80 payable at 80%. The secondary plan allowed $90 payable at 80%.

  10. Coordination of Benefits

    Under HIPAA, HHS adopted standards for electronic transactions, including for coordination of benefits.The coordination of benefits transaction is the transmission from any entity to a health plan for the purpose of determining the relative payment responsibilities of a health plan for health care claims or payment information. See the Coordination of Benefits Transactions Basics.

  11. Complete Guide to Coordination of Benefits in Healthcare

    Coordination of Benefits (COB) is necessary when an individual is signed up on two plans. Some common examples for requesting coordination of benefits are: Learn about the pros and cons of in-house billing vs. outsourced medical billing.

  12. What Is Coordination of Benefits (COB)?

    Coordination of benefits examples There are various scenarios in which someone might have two health insurance plans. Here are some everyday situations and how to determine which plan is most likely to be the primary or secondary payer. Coordination of benefits rules COB rules help organize and manage healthcare benefits and costs.

  13. What Is Coordination of Benefits?

    To understand how benefit coordination applies in practice, we can look at a simplified example: A patient has a medical bill totalling $100. A claim is first submitted to the primary payer/insurer, who is responsible for $80, based on their coverage plan.

  14. PDF Coordination of Benefits.

    This is called "coordination of benefits.". If you have Medicare and other health or drug coverage, each type of coverage is called a "payer.". When there's more than one potential payer, there are coordination rules to decide who pays first. The first or "primary payer" pays what it owes on your bills, and then sends the ...

  15. Example 02: Coordination of Benefits (COB)

    Example 02: Coordination of Benefits (COB) Coordination of benefits; the patient is not the subscriber; payers are commercial health insurance companies. SERVICES RENDERED: Root Canal treatment for tooth #5 at $200.00. ELECTRONIC ROUTE: VAN submits claim on behalf of billing provider to Payer A (receiver) (Example 2A) who adjudicates the claim.

  16. Coordination of Benefits

    Your health insurance benefits will need to be coordinated if: You are enrolled on the Student Health Insurance Plan and any other health plan. Examples of other insurance could include a parent's plan, a spouse's plan, and/or a government-sponsored plan like Medicare or Medicaid. A dependent is enrolled on the Student Health Insurance Plan ...

  17. ADA Guidance on Coordination of Benefits

    Coordination of Benefits takes place when a patient is entitled to benefits from more than one dental plan. Plans will coordinate the benefits to eliminate over-insurance or duplication of benefits. General Coordination of Benefits Rules It is important to note that only group (employer) plans are required to coordinate.

  18. Example 07: Coordination of Benefits

    Example 07: Coordination of Benefits Coordination of benefits is described in detail in the 005010X221 guide in section 1.10.2.13 (Secondary Claim Reporting Considerations). This response supplements those requirements and is not a replacement or contradiction of that section. Background

  19. Coordination of Benefits

    Dental Plans - Coordination of Benefits. One area of dental benefits that can cause some confusion is coordination of benefits (COB). COB takes place when a patient has more than one dental plan and is able to use both of them to cover their dental procedures. When this occurs, the two plans work together to coordinate benefits to eliminate ...

  20. PDF Coordination of Benefits Double Coverage Examples

    Coordination of Benefits - Double Coverage Examples How COB is Applied with Double Coverage State Premier PPO / State Premier PPO Primary is $25 copay, Secondary $25 copay Billed Charge $100.00 MAC* $80.00 In-network Discount $20.00 Primary Plan Member Copay $25.00 Primary Plan Pays $55.00 Secondary Plan Member Copay $25.00

  21. Coordination of Benefits (COB)

    Information concerning the Medicare Coordination of Benefits (COB)/Coordination of Benefits Agreement (COBA) claims crossover process may be referenced in the Medicare Claims Processing Manual (IOM Pub.100-4), Chapter 28, Section 70.6 and successive sections. Additional information about the COBA crossover process is available. HIPAA TR3s can ...

  22. COORDINATION OF BENEFITS: NON-DUPLICATION PLANS

    COB, short for coordination of benefits, is when the patient is covered by more than one benefit plan (dual coverage) and the two benefit plans are coordinated so that no more than 100 percent of the total covered expense of any treatment is paid. For example, the patient has coverage with their employer's plan and their spouse may have also ...

  23. Example 03: Coordination of Benefits (COB)

    Example 03: Coordination of Benefits (COB) Coordination of benefits; patient is not the subscriber; payers are commercial health insurance companies. Patient and subscriber have same primary policy number. Claim submitted to primary insurer with information pertaining to the secondary payer. RECEIVER: Alliance Health and Life Insurance Company ...