Understanding Secondary Insurance Coverage And Its Benefits

It is perfectly legal to have two health insurance plans, and doing so can help cover insurance expenses and fill gaps in your primary insurance coverage. However, it is important to understand how primary and secondary insurance works. The primary payer pays what it owes on your bills first, and then sends the remaining balance to the secondary payer to pay. The secondary payer only pays if there are costs the primary payer didn't cover. Medicare may be the primary or secondary payer, depending on the situation and what your other health insurance is. For example, if you are on active duty, Medicare is the secondary payer, and TRICARE is the primary payer. If you are not on active duty, Medicare is the primary payer, and TRICARE may be the secondary payer.

Medicare and secondary insurance

If you have Medicare and other health insurance, each type of coverage is called a "payer". The "primary payer" pays up to the limit of its coverage, and then sends the rest of the balance to the "secondary payer". The secondary payer only pays if there are costs that the primary payer didn't cover. This order of payment is called "coordination of benefits".

The Benefits Coordination and Recovery Center (BCRC) collects information on your healthcare coverage and stores it in your Medicare record. This record must be updated every time you make a change to your healthcare coverage. If you have questions about who pays first, or if your coverage changes, you can call the BCRC at 1-855-798-2627 (TTY: 1-855-797-2627).

There are several situations in which Medicare is the secondary payer. For example, if you are aged 65 or older, are covered by a Group Health Plan (GHP) through your current employment or your spouse's current employment, and your employer has 20 or more employees, then the GHP pays primary and Medicare pays secondary. If you are aged 65 or older and have an employer retirement plan, Medicare pays primary and retiree coverage pays secondary. If you are entitled to Medicare and were in an accident or other situation where no-fault or liability insurance is involved, no-fault or liability insurance pays primary and Medicare pays secondary.

Medicare may make a conditional payment if the primary payer does not pay the claim promptly (usually within 120 days). A conditional payment is a payment Medicare makes for services another payer may be responsible for. The payment is "conditional" because it must be repaid to Medicare when a settlement, judgement, award, or other payment is made.

Primary and secondary payers

When you have two insurance plans, one of them is designated as the "primary payer", while the other becomes the "secondary payer". The primary payer is responsible for paying your healthcare bills first, up to the limits of its coverage. The secondary payer then covers the remaining costs, such as deductibles, copayments, or coinsurance.

Medicare is often the primary payer for beneficiaries who are not covered by other types of insurance or coverage. However, when you have Medicare and another insurance plan, Medicare may act as either the primary or secondary payer for your medical costs. If you have coverage from your job or military benefits, Medicare will typically be the primary payer, with your other insurance acting as the secondary payer. In certain cases, such as if you are over 76 and eligible for Medicare but not retired, Medicare can be the secondary payer to your company's health plan.

The coordination of benefits rules determine which insurance pays first. It is important to inform your healthcare providers if you have multiple types of coverage to ensure that your bills are sent to the correct payer and avoid delays. You should also notify them of any changes in your insurance or coverage.

Secondary payer plans often come with their own monthly premium, which you pay in addition to your standard Part B premium. However, despite the added cost, many people find that their overall expenses are reduced as the secondary payer covers their out-of-pocket expenses. Secondary payers can also provide additional benefits not offered by Medicare, such as dental visits, eye exams, and fitness programs.

Benefits of two insurance plans

Having two insurance plans can provide more comprehensive coverage, offering greater protection and additional benefits. This is especially true if you frequently pay medical expenses out-of-pocket or have high healthcare costs.

• More Comprehensive Coverage: Multiple medical policies offer more benefits and coverage, helping with medical bills as two plans can cover healthcare costs.
• Greater Protection: If you have coverage under someone else's plan (e.g., a parent or spouse) and your own plan, losing your job won't result in a loss of health insurance.
• Reduce Coverage Gaps: If one insurance policy lapses, you won't be left without coverage as the second plan will automatically fill the gap.
• Potential for More Coverage: If your two plans are complementary, i.e., they cover different aspects of your care, you can fill in the gaps left by the first plan.

Challenges of Two Insurance Plans

While having two insurance plans has its advantages, there are also some challenges and potential drawbacks to be aware of:

• Out-of-Pocket Costs: You are still responsible for both plans' monthly premiums and other out-of-pocket expenses, which can add up over time.
• Complex Claim Processing: Having two separate plans can make processing claims more complicated and time-consuming, especially if you need to file an out-of-network claim with both insurers.
• Double Billing: Healthcare providers may mistakenly bill both insurance plans for the same service, leading to overbilling and confusion.
• Not Always Full Coverage: Just because you have two plans doesn't mean you'll receive double the coverage. The combined benefits won't surpass 100% of the total cost, and you may still have out-of-pocket expenses.

When to get secondary insurance

Secondary insurance is an additional insurance policy that covers services that your primary insurance plan may not. It is also known as supplemental or voluntary coverage. It is important to note that most secondary health insurance does not need to conform to Affordable Care Act (ACA) standards, meaning insurance carriers can ask about pre-existing conditions and deny coverage in certain situations.

There are three common cases when secondary insurance is used:

• Underage children with parents who both have insurance: Both parents can enrol their children in their health insurance plans. The plan belonging to the parent whose birthday is first in the calendar year is typically the primary insurance, and the other parent's plan becomes the secondary insurance.
• Adults under 26 with health insurance: Under the Affordable Care Act (ACA), unmarried and married children can remain on their parents' insurance until they are 26. They can also be covered by a school or employer health insurance plan, which would be their primary insurance, with their parents' plan as the secondary insurance.
• Married adults or domestic partners with insurance: If both individuals in a marriage or domestic partnership have health insurance, they can add their spouse or partner to their plan as a dependent. Their own insurance will be the primary insurance, and their spouse or partner's insurance will be the secondary insurance.

Secondary insurance can also be purchased privately to extend your coverage. For example, if you have a medical plan through your employer, you may be able to add a secondary or supplemental plan during enrolment. You can also buy a separate plan through a private insurance company. These plans can help cover out-of-pocket expenses related to serious illness, accidents, or hospitalisation. They can also provide coverage for services not typically covered under your primary plan, such as vision, dental, and cancer insurance.

Secondary insurance and out-of-pocket costs

If you have more than one health insurance policy, one insurance will be designated as the "primary payer" and the other will be the "secondary payer". The primary payer covers your medical costs up to the limits of its coverage, and the secondary payer will cover any costs that the primary payer does not. This is known as the coordination of benefits.

It is important to inform your doctor and other healthcare providers of any changes in your insurance or coverage when you get care. This will help them send your bills to the correct payer and avoid delays.

Out-of-pocket costs refer to the portion of your covered medical expenses that you are expected to pay during a plan year. They can include your health plan's deductible, copays, and coinsurance, for any covered, in-network services. The monthly premiums you pay to have coverage are not included in out-of-pocket costs. If you use out-of-network providers, your out-of-pocket costs can be considerably higher, and some plans do not cover out-of-network care at all unless it is an emergency.

The out-of-pocket maximum is the cap on the amount of money you have to pay for covered health care services in a plan year. Once you reach this amount, your health plan will pay 100% of all covered health care costs for the rest of the plan year. Plans that meet Affordable Care Act (ACA) standards are required to have out-of-pocket maximums.

Frequently asked questions