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How health insurance works
What is coordination of benefits?
Coordination of Benefits Rules
COB rules vary for each individual and depend on the size and type of your plans and what state you live in, as many states also have different laws in place. Additionally, large employers may have their own COB rules for medical claims.
· Employer-sponsored plans: 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.
· Birthday Rule: The “birthday rule” is common for children covered by two employer group health plans. In this situation, the plan covering the parent whose birthday falls first in the year will pay primary on the children; the other parent’s plan becomes the secondary payor.
· Medicaid and Medicare: Typically, Medicaid only pays as a last resort when there are multiple plans. But Medicare can be 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.
· Workers’ compensation: The worker’s comp pays first, and your health insurance plan would is considered secondary.
· 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.
How the Coordination of Benefits system works
Here’s an example of how the COB 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.
Non-duplication Coordination of Benefits method
The secondary plan does not reimburse any more on the claim than it would have paid if it were the primary payor. The secondary carrier reviews the primary paid amount. If the primary carrier’s paid amount is equal to or more than what the secondary payor would have paid on its own, no benefit is payable.
In this case, if you incur a $100 office visit expense and the primary payor pays $80, the secondary payor with a $25 office visit copay pays nothing because the primary plan paid more than what the secondary payor would have paid on its own.
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 and parent’s insurance coverage.
Here is a list of situations and which plan would likely serve as the primary insurer and which ones would probably be secondary: