Jeffrey Wade
It is becoming increasingly common for individuals to have more than one health insurance plan. In 2021, approximately 43.1 million people in the US were covered by more than one type of health insurance. While having multiple health insurance policies can provide some financial protection in an accident or illness, it can also lead to higher costs. In the case of an individual with three health insurance policies, the coordination of benefits between the insurers becomes more complex. The primary insurer pays first, followed by the secondary insurer, and finally the tertiary insurer, each paying a portion of the medical bills. However, the rules for designating the primary, secondary, and tertiary insurers may vary by state and insurance provider.
| Characteristics | Values |
|---|---|
| Number of people in the U.S. with multiple health insurance policies | 43.1 million (2021) |
| Percentage of people in the U.S. with multiple health insurance policies | 13.1% (2021) |
| Percentage of people in the U.S. with multiple health insurance policies (2020) | 12.6% |
| Common scenarios for multiple health insurance policies | Receiving Medicaid or Medicare coverage in addition to employer-sponsored insurance |
| Being a dependent on a parent's plan and having an individual plan | |
| Being a dependent on both divorced parents' plans | |
| Being married and being covered by a spouse's plan in addition to an individual plan | |
| Benefits of multiple health insurance policies | Reduced out-of-pocket costs if plans complement each other |
| Greater financial security in the event of sudden unemployment | |
| Drawbacks of multiple health insurance policies | Higher costs due to multiple premiums and deductibles |
| Administrative burden of keeping plans in the correct order |
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What You'll Learn
Multiple health insurance plans
It is becoming increasingly common for individuals to have more than one health insurance plan. According to the US Census Bureau, approximately 43 million people (13.1%) were covered by more than one type of health insurance in 2021, up from 12.6% in 2020.
There are several scenarios in which an individual might be covered by multiple health insurance plans. For example, a person may supplement their private health insurance plan with a government program such as Medicaid or Medicare. A married couple may also have separate health insurance plans through their respective employers. Additionally, a person under the age of 26 may have their own health insurance plan while also remaining a dependent on their parent's plan.
When an individual has multiple insurance plans, the primary insurer pays first, up to its coverage limits. The secondary insurer then covers any remaining costs. It is important to note that having multiple insurance policies does not mean that an individual will be reimbursed multiple times for the same expense. Due to a process called coordination of benefits (COB), the combined benefits from multiple insurance plans will not surpass the total cost of a medical visit. The COB process determines which plan is primary and which is secondary, and this may vary by state and insurance provider.
While having multiple health insurance plans can provide financial protection in the event of an accident or illness, there are also potential drawbacks. For example, an individual with multiple plans may have to pay multiple premiums and deductibles, which can add up over time. Additionally, managing multiple insurance plans can be complex and time-consuming, as all prior authorizations, referrals, and other requirements must be run by all insurers in the correct order.
Overall, while having multiple health insurance plans can offer some benefits, it is important to carefully consider the potential costs and complexities involved.
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Primary and secondary insurance
It is becoming increasingly common for individuals to have more than one health insurance plan. According to the US Census Bureau, approximately 43.1 million people (13.1%) were covered by more than one type of health insurance in 2021. There are several scenarios in which someone may be covered by multiple health insurance plans. For example, an individual might supplement their private health insurance plan with a government program such as Medicaid or Medicare, or a married person may have health insurance through their employer and be listed as a dependent under their spouse or partner's health insurance. Children of divorced parents may also be listed as dependents on both of their parents' health insurance policies.
When an individual has multiple health insurance plans, one plan is considered primary and the other is secondary. The primary plan processes the insurance claim first and covers the bill up to its coverage limits. The secondary plan then covers some or all of the remaining costs left over after the primary plan has paid its share. This is called the coordination of benefits (COB) and is sorted out by the insurance carriers involved. Individuals do not get to choose which plan is the primary one and which is the secondary one. Rules may vary by state and insurance provider, but the following scenarios usually apply when determining primary and secondary responsibility.
If you have employer or union coverage and get Medicare drug coverage, you may lose your employer or union health and drug coverage for yourself and your dependents. In cases where Medicare is primary to your current insurance, you should enrol in Medicare Part B to avoid incurring high costs for your care. This is because, when Medicare is primary to your other insurance, your other insurance may not pay for costs until Medicare pays, so you would be responsible for paying these costs out of pocket. When Medicare is secondary, your current insurance will pay the majority of the cost for covered services.
It is important to constantly keep the insurance plans in the correct order and inform all relevant parties (insurers, doctors, hospitals, pharmacies, etc.) to bill them accordingly. If this goes wrong, you may have to spend months fixing it, whereas the insurers and doctors can come after you for the full price years later.
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Coordination of benefits (COB)
It is becoming increasingly common for individuals to have more than one health insurance plan. According to the US Census Bureau, approximately 43.1 million people (13.1%) were covered by more than one type of health insurance in 2021. This is up from 12.6% in 2020.
There are benefits and drawbacks to having multiple health insurance plans. A secondary health insurance plan may cover expenses that the primary plan does not, reducing overall out-of-pocket costs. Additionally, having multiple plans can provide a greater sense of security in the event of sudden unemployment and loss of one insurance plan. However, managing multiple plans can be administratively complex, with additional paperwork, coordination with multiple providers, and the need to understand the details of each plan's rules and coverage. Furthermore, the combined costs of premiums, deductible copayments, and coinsurance may outweigh the benefits received.
When determining the primary and secondary plans, COB sets the rules based on the situation. Rules may vary by state and insurance provider, but certain scenarios usually apply. For example, if an individual has continuation coverage, such as the Consolidated Omnibus Budget Reconciliation Act (COBRA), and coverage from another plan, the benefits of the plan covering the individual as a member or employee are primary, while the continuation coverage is secondary. If an individual has coverage under a government program like Medicaid or Medicare, determining primary or secondary responsibility will depend on factors such as age and the size of the company providing employer coverage. If none of the provisions determine which plan is primary, the plan the individual has been enrolled in the longest is typically considered the primary plan.
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Pros and cons of multiple policies
While a majority of people in the US are enrolled in one health plan for a calendar year, there is a growing percentage of the population with multiple health policies. In 2021, approximately 43.1 million people (13.1%) were covered by more than one type of health insurance.
Pros of multiple health insurance policies
Having multiple health insurance policies can be beneficial in the following ways:
- You can get more comprehensive coverage. If there is anything missing in your first health insurance policy, you can get it covered by another health insurance policy.
- You can reduce your out-of-pocket medical costs, especially if you expect significant healthcare expenses.
- You may feel a greater sense of security if you were to suddenly become unemployed and lose one insurance plan.
- You can get health insurance until your medical bill is fully paid.
Cons of multiple health insurance policies
Multiple health insurance policies can also present the following challenges and drawbacks:
- You must constantly keep the plans in the correct order and inform insurers, doctors, hospitals, and pharmacies to bill them accordingly. If this goes wrong, you will be held responsible for fixing it, while the insurers and doctors can come after you years later for the full price.
- You will need to run all prior authorizations, referrals, and the like by all plans. If one plan doesn't agree or a doctor/hospital is out of network with one, then a "non-primary" clause might be triggered, and at least two plans will pay nothing.
- You may have two separate premium and deductible responsibilities, which can add up over time and outweigh the benefits of having multiple insurance plans.
- Even with multiple insurance policies, your claim can be at most 100% of the total medical bill.
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Managing three insurance plans
While it is legal to have multiple health insurance plans, managing three insurance plans can be complex. Here are some key considerations and strategies for effectively managing three insurance policies:
Understanding Primary, Secondary, and Tertiary Coverage
Recognize the difference between primary, secondary, and tertiary coverage. The primary plan is typically your main insurance policy and will be the first to cover your medical expenses. If your primary insurance cannot cover the entire claim, the secondary plan may cover all or a portion of the remaining costs. The tertiary plan then steps in to cover any leftover expenses after the primary and secondary plans have been applied. The order of coverage is crucial, and you must ensure that all providers bill your plans in the correct sequence.
Coordination of Benefits (COB)
Understand the Coordination of Benefits (COB) process. The COB determines the order of coverage for each insurance plan and helps dictate which plan pays first. While you don't get to choose which plan is primary and which is secondary, the COB rules are based on specific situations. These rules may vary by state and insurance provider, so it's important to familiarize yourself with the regulations in your area.
"Other Insurance" Clauses
Be aware of "other insurance" clauses in your policies. These clauses dictate priority when multiple policies are triggered for the same risk. They typically take three forms: escape, excess, or pro rata. An escape clause renders a policy inapplicable if other insurance exists, an excess clause makes the policy excess to other insurance, and a pro rata clause states that the policies contribute proportionally to the loss. Understanding these clauses will help you navigate potential conflicts between insurers.
Double Billing and Overbilling
Stay vigilant about double billing and overbilling issues. Sometimes, healthcare providers may mistakenly bill all three of your insurance plans for the same service, leading to confusion and potential overpayment. Regularly review the explanation of benefits (EOB) from each plan and contact your providers to clarify any discrepancies.
Evaluating Costs and Coverage
Don't assume that having three insurance plans will automatically save you money. Evaluate your current and future medical needs, as well as the costs and coverage of each plan. Consider the premiums, deductibles, and other out-of-pocket expenses associated with each policy. Assess whether the benefits of having multiple plans outweigh the potential costs.
Communication and Planning
Maintain open communication with all three insurance providers. Proper planning and proactive discussions with insurers can help alleviate concerns and ensure everyone is on the same page. Additionally, consult with your human resources team if you have questions about your employer-sponsored plan.
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Frequently asked questions
Yes, a person can have three medical insurance policies. However, it is important to note that having multiple insurance plans can be complex and may not always result in better coverage or lower costs.
When an individual has multiple insurance policies, the insurers use a framework called Coordination of Benefits (COB) to ensure that both plans pay their fair share without paying more than 100% of the medical costs. The primary insurer pays first, up to its coverage limits, and the secondary insurer pays any remaining costs. If there is still a balance, the tertiary insurer may cover it.
Having three medical insurance policies can provide additional financial protection in the event of an accident or illness. It may also offer a greater sense of security, especially if an individual loses one insurance plan due to unemployment or other circumstances.
Managing three insurance policies can be complex and time-consuming. Individuals must ensure that the plans are always billed in the correct order and that all prior authorizations and referrals are approved by all three insurers. Additionally, having multiple insurance plans may result in higher costs due to multiple premiums, deductibles, and out-of-pocket expenses.
