Coordination of benefits is the process of determining which health insurance will pay first and which one will cover the remaining balance. Even if you have insurance, it doesn’t cover all expenses (after-deductible expenses). So, with coordination of benefits you can get paid twice.
In this guide, we find out What Is The Coordination Of Benefits For Health Insurance, coordination of benefits in medical billing, types of coordination of benefits, and bcbs coordination of benefits.
What Is The Coordination Of Benefits For Health Insurance
A coordination of benefits (COB) is a term used to describe how a health plan will pay for care when it has more than one insurance policy for the same person who needs medical services. For example, if you have both an employer-sponsored health plan and Medicare coverage, each will pay its share before any COB rules are applied.
If you have more than one health plan, each one must determine its own payment. A plan that pays second is known as the secondary payer. The secondary payer may pay all or part of the remaining balance not paid by the primary payer.
If you have more than one health plan, each one must determine its own payment. A plan that pays second is known as the secondary payer. The secondary payer may pay all or part of the remaining balance not paid by the primary payer.
Your health plan will often decide which insurance company should be your primary carrier and which should be your secondary carrier. It’s important to keep track of these decisions because they can affect how much money you’ll owe for services covered under both plans.
If you have more than one group health plan, each plan should cover its share of covered health care expenses before any coordination of benefits rules are applied. The amount of coverage a policy provides is usually determined by contract and subject to state insurance laws.
If you have more than one group health plan, each plan should cover its share of covered health care expenses before any coordination of benefits rules are applied.
The amount of coverage a policy provides is usually determined by contract and subject to state insurance laws.
There are two types of coordination of benefits:
Coordination of benefits is a provision that encourages insurers to work together to settle claims, rather than making you fight for your money. There are two types of coordination of benefits:
- Coordination with no coordination of benefits (CBOB)
- Coordination with coordination of benefits (COB)
A plan that provides COB must pay a claim first before another insurer pays it. A plan that provides CBOB will repay another insurer’s payment only if the claim was paid under an accident or illness policy issued by the same company and not paid under any other sickness policy. For example, if you had two health plans—one covering accidents and one covering sickness—and one paid 80 percent while the other paid 20 percent on a given bill, only 80 percent would be repaid by your second plan since they were both written by the same insurance company/agent
The order in which plans pay when there is no coordination of benefits provision in either plan.
If there is no coordination of benefits provision in either plan, then the primary payer pays first, and the secondary payer pays after that. For example:
- Your employer’s plan is your primary insurance and you have an individual health plan through a separate policy that covers you when you are not covered by your employer.
- You have surgery that costs $10,000. The hospital bills your insurer first for $10,000 and then bills your individual policy for what it doesn’t cover after the $10,000 has been paid out by the employer’s plan.
- Your spouse works for another company which has its own employee health insurance program and has decided to put him on its own health plan with a high deductible ($2,500). He gets into an accident at work and needs surgery costing $10K; he files with his own carrier first because his deductible isn’t met yet from having gone over only once during this calendar year (the annual limit).
Secondary Insurance Rules When a person has two or more health plans and both plans provide coverage for the same claim, each plan needs to know whether it is the primary or secondary insurer. Primary means first and secondary means second, so the primary insurer pays first, and the secondary insurer pays after that. These rules tell how claims are decided between primary and secondary insurers. Under these rules, insurers of medical and dental plans must decide who pays first when someone is covered under more than one plan (e.g., parents’ medical plan). Usually, a medical plan issued to a person’s parents covers that person first if he or she is under age 19 and unmarried/not disabled (see exception).
The secondary insurance rules help decide who pays first when someone is covered under more than one plan (e.g., parents’ medical plan). Usually, a medical plan issued to a person’s parents covers that person first if he or she is under age 19 and unmarried/not disabled (see exception).
If there are no coordination of benefits provisions in either plan, the order in which plans pay when there is no coordination of benefits provision in either plan will be based on:
- The fee-for-service sharing percentage(s) applicable to each health care service;
- Whether your parent’s medical coverage was primary or secondary at the time an injury occurred;
- If neither parent had coverage at time of injury, see our rules for nonelective coverage by group health plans at www.chcf.org/CoordinationOfBenefits
coordination of benefits in medical billing
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. Insurance companies coordinate benefits for several reasons:
In today’s world of dual-income, working couples, working Medicare beneficiaries, and the ability to extend dependent coverage to children up to age 26, dual health coverage occurs frequently. Understandably, most health plans have rules to determine which plan will pay primary and which plan will pay secondary. These rules are typically outlined in the “coordination of benefit” provisions in your summary plan description, the document that explains your benefits and how they are determined.
How does coordination of benefits work?
Coordination of benefits allows two insurance carriers to determine their fair share of the cost for covered services. Your out-of-pocket cost for services is limited to the amount, if any, that remains unpaid by the insurers. Covered services refers to the medical care, equipment, services, or prescription drugs the insurers include in their plan benefits.
In each of these scenarios there is a primary payor and secondary payor. You or your healthcare provider submits the claim to the primary payor first.
Situation #1
You have coverage under your own insurance plan and under your spouse or partner’s plan: your own insurance plan is always the primary payor; your spouse or partner’s insurance plan is the secondary payor.
You (or your healthcare provider on your behalf) submit a medical or prescription drug claim to your own insurance plan first. Your insurance plan pays its portion of the claim. If your insurance plan doesn’t cover the full claim amount, you can submit the claim to your spouse or partner’s insurance plan, with the explanation of benefits statement from your insurance plan, requesting payment for the remainder of the expense.
When submitting a claim to your partner’s insurance, you may not be reimbursed for the entire remaining balance. This will depend on the amount of coverage offered by your partner’s insurance plan.
Situation #2
Your spouse or partner’s health insurance plan is the primary payor and receives his or her claims first, determines benefits, and pays accordingly. Your plan is the secondary payor. Upon receiving the claim and the primary insurer’s explanation of benefits, the secondary payor determines what portion of the balance of the bill, if any, is your plan’s responsibility to pay. Your spouse or partner pays the remaining balance, if any.
Situation #3
Your children are dually insured by your health insurance plan and your spouse or partner’s plan. In most cases, the health plans will perform coordination of benefits using the “birthday rule.” This means if your birthday month occurs earlier in a calendar year than your spouse or partner’s, your plan will be primary and the other plan will be the secondary payor. If you share the same birthday month as your spouse or partner, the plans will usually assign the order of payors so that the plan that has provided coverage the longest time is the primary payor and the other plan is secondary payor. If you and your spouse are divorced, the custodial parent’s health plan is usually primary, unless a court decree specifies the parent who is responsible for the children’s health insurance.
Situation #4
Your employer’s group health plan is the primary payor if the company employs 20 or more people. It receives your claim first, determines benefits, and pays according to the plan’s benefits. Medicare is the secondary payor, and determines what portion of the balance of the bill, if any, Medicare will pay. In this hypothetical situation, you have Medicare Part A, which provides coverage for hospital services. If you submitted a claim for a physician office visit, Medicare Part A would deny the claim and pay nothing because it does not cover physician office exams. (Medicare Part B does.) If you submit a claim for a hospital stay, Medicare Part A will determine what portion of the balance of the bill, if any, is payable according to the Medicare Part A benefits, which typically includes a daily copayment for hospital stays.
What are the rules of coordination of benefits?
The National Association of Insurance Commissioners (NAIC) released its first set of model coordination of benefits guidelines in 1971. This model was to serve as an example for employers and state legislatures to adopt as a consistent set of coordination of benefits rules. Many plans use the model coordination provisions. Highlights of the model coordination of benefits guidelines follow.
How do I know what my cost for medical care or prescription drugs will be after my insurance companies coordinate benefits?
Coordination of benefit provisions do not allow the claimant to receive more than 100% of the eligible charges between both health plan payments. Furthermore, plans take different approaches when they calculate coordination of benefit payments. Usually, you can find out how your insurance plans perform coordination of benefits by reading the coordination of benefits provision in your Summary Plan Description or policy.
If you don’t find the provision, or have questions about how coordination of benefits works for one or both plans, ask for an explanation from the plan administrator or insurance company. Two common methods of coordination of benefits and payment results follow.
Full coordination of benefits method
The primary plan calculates the claim payment as if there is no other insurance involved. The secondary carrier also calculates what benefit amount would have been paid for the claim if there were no primary carrier involved. The primary plan pays the benefit as calculated. The secondary carrier pays the balance if its calculation shows at least that amount would have been payable if no other coverage had been in place. For example, let’s say you are covered by two plans, one has a $500 deductible and the other a $25 office visit copay that apply to physician care in the office. You incur $100 expense at the doctor’s office. Your primary payor applies the $100 toward meeting the $500 deductible and pays nothing. The secondary payor applies the plan’s $25 copay (calculating payment as if no other coverage is in place) and pays $75. You would be responsible for paying the $25 office visit copay.
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 doctor 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 you are covered by two plans, you will know, ultimately, what amount you owe on a medical or prescription drug claim by reading the second payor’s explanation of benefits. This statement will show the amount you owe, the amount the second payor paid, and the amount that was disallowed because it was previously paid by the primary payor and/or exceeded the contract rate of the provider of service.
Are you looking for health insurance?
eHealth’s intuitive site and license health insurance agents can help you compare your health insurance plan options to help you find the plan that suits you best. Keep in mind that eHealth’s help is completely free; you will not pay more for a plan purchased through eHealth than you would if you were to purchase it anywhere else.
types of coordination of benefits
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.
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.
bcbs coordination of benefits
Coordination of Benefits (COB) applies when expenses for covered services are eligible under more than one insurance program. Usually, one health insurance company has primary responsibility and there is at least one other health insurance company with responsibility for any remaining patient liability. On occasion, an automobile insurance or workers’ compensation insurance carrier will be involved.
Regardless of which insurance carriers are responsible, the combined reimbursements are never greater than the actual charges of services and generally are not more than the primary carrier’s contract rate. This portion of the manual offers some guidelines to help in COB situations. Remember to ask your patients if they have other health insurance coverage.
OBLIGATIONS OF HOSPITAL TO OBTAIN COB INFORMATION AND TO BILL PRIMARY FIRST
Claims should be submitted to the primary carrier first. You must help with processing forms required to pursue COB with other health care plans and coverages (including and without limitation, workers’ compensation, duplicate coverage and personal injury liability). You are required to make diligent efforts to identify and collect information concerning other health care plans and coverages at the time of service. Where Horizon BCBSNJ is, or appears to be, secondary to another plan or coverage, you must first seek payment from such other plan or coverage
The New Jersey state law, known as the Health Claims Authorization, Processing and Payment Act (HCAPPA), states that no health insurer can deny a claim while seeking COB information unless good cause exists for the health insurer’s belief that other coverage is available (when applicable); for example, if the health insurer’s records indicate that other insurance coverage exists. Horizon BCBSNJ will continue to gather information from member regarding other coverages in an effort to maintain accurate records and have the appropriate health insurer be financially responsible.
PATIENT WITH TWO OR MORE INSURANCE PLANS (other than Medicare, Motor Vehicle Accidents or Workers’ Compensation)
If you are providing care to the covered spouse of a Horizon BCBSNJ subscriber who also has his/her own health plan, the spouse’s health plan is always primary UNLESS all of the following are true:
To determine the primary carrier, you need the month and day of the parents’ birth dates; the year is never considered. The parent whose birthday falls earlier in the year has the primary plan for the dependent child. If both parents have the exact same birthday (month and day), the plan in effect the longest is primary. The Birthday Rule only applies if both carriers use the Birthday Rule.
The father’s plan is primary for the dependent child. If one parent’s contract uses the Birthday Rule and the other contract uses the Gender Rule, then the Gender Rule determines the father’s plan as primary.