Jeffrey Wade
When an individual has two health insurance plans, one is considered the primary payer and the other is the secondary payer. The primary payer pays up to the limits of its coverage, after which the remaining balance is sent to the secondary payer. This process is called coordination of benefits (COB) and ensures that both health plans pay their fair share without paying more than 100% of the medical costs. There are several scenarios in which an individual might have two health insurance plans, such as receiving insurance through an employer while also being covered by Medicare or Medicaid.
| Characteristics | Values |
|---|---|
| Number of insurance plans | Two |
| Primary insurance | The plan that is billed first |
| Secondary insurance | The plan that pays the remaining costs |
| Coordination of benefits | The process that ensures both insurers pay their fair share without paying more than 100% of the medical costs |
| Primary payer | Pays up to the limits of its coverage |
| Secondary payer | Pays only if there are costs the primary insurance didn't cover |
| Medicare as primary insurance | Enroll in Part B to avoid high out-of-pocket costs |
| Medicare as secondary insurance | The current insurance will pay the majority of the cost for covered services |
| Determining factors | Individual circumstances, such as age, employment status, and parental coverage |
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What You'll Learn
When do you need secondary insurance?
You might need secondary insurance if you have two health insurance plans. This could be the case if you are:
- A senior citizen who continues to work past the age of 65 and is therefore covered by both Medicare and an employer-based plan.
- An injured worker who qualifies for worker's compensation but also has your own insurance coverage.
- A military veteran covered by Veterans Administration benefits and your health plan.
- An active military member who is covered by military coverage and your own health insurance.
In these cases, your primary insurance pays the first portion of the claim up to your coverage limits, and your secondary insurance may cover some or all of the remaining costs.
You might also need secondary insurance if your primary insurance does not cover certain treatments or services. For example, if you need prescription eyewear or have a chronic medical condition, you may need a secondary insurance plan to cover these expenses. Similarly, if you have a high deductible on your primary plan, a secondary insurance plan could help you pay this deductible.
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How to choose the right secondary insurance?
When you have two forms of health insurance coverage, your primary insurance pays the first portion of the claim up to your coverage limits. Your secondary insurance may then cover some or all of the remaining costs. However, you may still be responsible for some out-of-pocket costs, such as deductibles, copay and coinsurance fees.
When considering a secondary insurance plan, it is important to evaluate your primary insurance plan and determine what it covers and what it does not. For example, if your primary plan does not cover many of your hospital costs and you expect to need hospital care in the future, a secondary hospital care insurance plan may be right for you. Other types of secondary insurance plans include vision, dental, disability, life insurance, accident insurance, and Medicare supplement insurance.
Secondary insurance plans can help cover out-of-pocket health care costs if you get seriously injured or sick. They can also help cover copays, depending on the insurance plan. However, it is important to note that most plans will not cover services or treatments that are experimental or cosmetic.
When deciding whether to purchase a secondary insurance plan, it is essential to carefully consider your individual circumstances and what type of coverage would best suit your needs. It is also important to keep in mind that having a second insurance plan will likely result in paying two monthly premiums and two deductibles, which could increase your overall health expenses. Therefore, it is recommended to shop and compare health plans to find the best option for your situation.
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Who pays first?
When a patient has two insurance plans, the primary insurance is always billed first. This means that the primary payer pays the first portion of the claim up to the limits of its coverage. The secondary payer then reviews the remaining bill and picks up its portion. This process is called coordination of benefits (COB) and ensures that both health plans pay their fair share without paying more than 100% of the medical costs.
In the case of Medicare and a private health plan, Medicare is typically considered primary if the worker is 65 or older and their employer has fewer than 20 employees. On the other hand, a private insurer is primary if the employer has 20 or more employees.
If the patient is a child covered under both parents' plans, the birthday rule applies. The parent whose birthday comes first in the year provides primary coverage for the child. If both parents have the same birthday, the one who has had coverage under their plan the longest will be the one providing primary coverage. In the case of divorced or separated parents, the health plan of the parent with custody will be considered primary, and if the parents have joint custody, the birthday rule is generally used. However, if there is a court order requiring one parent to provide coverage, then that parent's plan will be primary.
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What if my primary insurance doesn't cover all my costs?
If your primary insurance doesn't cover all your costs, your secondary insurance may pick up some or all of the remaining costs. However, you might still be responsible for some out-of-pocket costs, such as copayments or coinsurance. In some cases, your secondary insurance may require a denied explanation of benefits from your primary insurance before covering the remainder of your costs.
For example, suppose you have a specialist visit that costs $400. If your primary plan covers 70% and pays $280, your secondary plan may cover part of or all of the remaining $120, depending on your coverage limits. If your secondary plan has any cost-sharing amounts, you may be responsible for paying them, even with a primary health insurance plan.
It is important to note that the coordination of benefits (COB) process ensures that the total amount your two plans will pay for your health expenses will never exceed 100% of the cost of those expenses. This means that, in some cases, you may still receive a bill for the remaining money if your primary insurance doesn't cover all your costs.
Additionally, it is worth mentioning that the "covers things the other plan doesn't" rule is, for most insurers, a service-level decision. For example, there might be certain services that are not covered by one plan but are covered by the other. In this case, the second plan will cover the cost of those services.
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How do I know if my healthcare provider is in-network?
It is essential to confirm whether your healthcare provider is in-network before scheduling an appointment. Healthcare providers and facilities that have not agreed to the terms and prices of a certain network are considered "out-of-network". If your insurance plan only covers in-network services, your insurance company may refuse to pay your medical bills if you visit an out-of-network provider.
There are several ways to check whether your doctor is in-network:
- Contact your insurance company: Visit your insurance company's website to access an updated network list. You can also call your insurance company or reach out to your plan's member services team to clarify any questions about your plan.
- Ask your healthcare provider: Many healthcare providers will have notices in their office or on their website listing the types of insurance they accept. However, it is important to verify this information with your insurance company, as providers may be incorrect about their network status.
- Use price transparency tools: Most insurance carriers have price transparency tools that can help you estimate your out-of-pocket expenses for in-network and out-of-network care.
- Request a tax identification number: Ask your healthcare provider for their tax identification number, then contact your insurance company to check if the provider is in-network for your specific plan.
Remember, even if a healthcare provider accepts your insurance, they may not be in-network for your particular plan. Always confirm with your insurance company to avoid unexpected financial burdens.
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Frequently asked questions
Primary health insurance is the plan that kicks in first, paying the claim as if it were the only source of health coverage. The secondary insurance plan then covers some or all of the remaining costs.
The insurance companies use a framework called "coordination of benefits" to work together and decide which plan is primary and which is secondary. This framework ensures that both health plans pay their fair share without paying more than 100% of the medical costs.
In this case, Medicare will either pay as the primary or secondary payer. If Medicare is the primary payer, your other insurance may not pay for costs until Medicare pays, leaving you responsible for paying these costs out of pocket. When Medicare is the secondary payer, your current insurance will pay the majority of the cost for covered services.
In this case, the "birthday rule" is often applied. The parent whose birthday comes first in the year will provide primary coverage for their children. If both parents have the same birthday, the plan that has been held the longest is usually the primary plan.
Most people have a primary insurance plan, but not everyone needs a secondary insurance plan. However, secondary insurance can be beneficial for married couples with separate plans, children with coverage under each parent, people under 26 with employer coverage who are also covered by their parents' plan, and seniors covered by Medicare and a private health plan.
