Unlocking The Complexities Of Billing Supplemental Insurance: A Patient's Guide To Navigating Secondary Coverage

If you have more than one health insurance plan, you may be wondering how to bill your supplemental or secondary insurance. This process is known as coordination of benefits and it ensures that insurance companies don't pay more than 100% of your total medical costs. The primary insurance pays first, up to the limits of its coverage, and then the secondary insurance pays a portion of the remaining balance. It's important to note that having two insurance plans doesn't mean you won't have any out-of-pocket expenses. You may still be responsible for copays or coinsurance, even after both insurance plans have paid their portion of the claim.

Understanding primary and secondary insurance

Primary Insurance:

The primary insurance policy is the first line of defence and the initial source of coverage. It is the insurance that pays first when you receive healthcare services. For example, health insurance obtained through an employer is usually considered primary insurance. When you file a claim, the primary insurance pays up to its coverage limits, and the remaining bill goes to the secondary insurance.

Secondary Insurance:

Secondary insurance comes into play when the primary insurance coverage is insufficient to cover all medical expenses. This can occur when the primary insurance reaches its coverage limits or excludes certain treatments. The secondary insurance may then cover the remaining costs or fill in the gaps left by the primary insurance. It is important to note that the secondary insurance company may not always pay the remaining bills, and individuals might still be responsible for some healthcare costs.

Coordination of Benefits:

The coordination of benefits is a crucial factor when an individual has multiple insurance policies. This process ensures that insurance companies pay their fair share without overlapping payments. It determines the order in which insurance policies pay out, reducing the duplication of benefits and streamlining the claims process.

Determining Primary and Secondary Insurance:

Several factors come into play when determining whether an insurance policy is primary or secondary. Here are some common scenarios:

• Married couples with separate health plans: The insurance provided by the employer of each spouse. The wife's employer-provided insurance is typically primary, and the husband's insurance is secondary.
• Children with coverage under both parents' plans: The "birthday rule" often applies here. The parent whose birthday comes first in the calendar year provides primary coverage.
• Children under 26 with divorced parents: If both parents list the child as a dependent, the birthday rule usually applies. If there is a court order requiring one parent to provide coverage, that parent's plan is primary.
• Children under 26, married, and covered by a spouse's and parent's plans: The spouse's plan is typically primary, and the parent's plan is secondary.
• Individuals with health insurance and Medicaid: Medicaid is typically secondary insurance.
• Veterans with VA benefits and a private health plan: VA benefits act as secondary insurance.
• Active military personnel with military coverage and a private health plan: Military coverage is usually secondary.

Advantages and Disadvantages of Dual Health Insurance:

Having two health insurance plans can provide benefits such as lower out-of-pocket costs, reduced coverage gaps, and increased coverage options. However, there are also drawbacks, including double premium and deductible payments, navigating additional policies, potential coverage overlap, and complications with billing.

The billing process for dual insurance

Having dual insurance means that a patient has two insurance plans that work together to offer coordinated benefits. This can happen when an individual has coverage through their employer and their spouse also has coverage through their employer, or when an individual has Medicare and is still working, so has coverage through their employer as well. In these cases, one plan will be the primary insurance and the other will be the secondary insurance.

When billing for dual insurance, it is important to first confirm which insurance is the primary insurance and which is the secondary insurance. This is done by checking the coordination of benefits (COB). The COB is a provision in an insurance policy that specifies what each insurer is responsible for paying. Generally, a patient's coverage from their own employer will be primary, and their coverage from a spouse or parent will be secondary. If a patient has both Medicare and employer coverage, the employer-based insurance pays first if the company has 20 or more employees. If it's a smaller business, Medicare pays first.

Once you have confirmed which insurance is the primary insurance, you can submit a claim to that insurer. After the primary insurance processes the claim, note the allowable amount, the patient responsibility, and any adjustments. Then, submit the claim to the secondary insurance. It is important to include the original claim amount, how much the primary insurance paid, and why they didn't pay the entire claim. Including the remittance information and explanation of benefits (EOB) is important for avoiding a claim denial from the secondary insurance.

If there is an outstanding COB issue, tell the patient to call the insurers and confirm which insurance plans are active and primary. Once the secondary insurance pays their portion of the claim, forward any remaining balance to the patient.

Pros and cons of dual insurance

Pros of Dual Insurance

Having two health insurance plans can be beneficial in several ways:

• Lower out-of-pocket costs: Dual insurance can help cover more costs, increasing savings when receiving healthcare. For instance, if the primary insurance covers only 80% of a procedure, the secondary insurance might cover the remaining 20%, leaving the individual with no out-of-pocket expenses.
• Reduced coverage gaps: Dual insurance prevents gaps in coverage. If one plan lapses, the other plan acts as a backup, ensuring continuous coverage.
• Potential for more coverage and benefits: If the two plans are complementary, dual insurance can provide access to more coverage and greater benefits. This is especially valuable when dealing with major illnesses, catastrophic injuries, or large claims.
• More accessible care: Multiple plans can expand access to different types of procedures, care providers, and forms of care outside the primary plan's network.
• Protection against claim rejection: With multiple insurers, there is a higher chance of a rejected claim being accepted by one of the insurers.
• Backup during unemployment: Dual insurance provides a safety net during unemployment. Losing a job usually means losing employer-provided health insurance. However, with dual coverage, individuals can still receive benefits through their spouse's or parent's plan without interruption.
• Tax benefits: In some cases, multiple health insurance plans result in additional tax benefits.

Cons of Dual Insurance

Despite the advantages, there are also several drawbacks to dual insurance:

• Double premiums and deductibles: Dual insurance means paying premiums and deductibles for two plans, resulting in higher monthly and out-of-pocket costs.
• Potential coverage overlap: If the two plans provide similar coverage, there may be limited additional benefits, making the second plan redundant and unnecessary.
• Complications with billing: Healthcare providers may be reluctant to bill two insurance policies, and the reimbursement process can be more complex and prone to errors.
• Navigating additional policies: Managing multiple policies, rules, and reimbursement processes can be challenging and time-consuming.

Scenarios where dual insurance is beneficial

Dual insurance, or having two health insurance plans, can be beneficial in several scenarios. Firstly, it can help reduce out-of-pocket expenses. If your primary insurance doesn't cover all your medical costs, your secondary insurance can step in and cover the remaining expenses, reducing your overall out-of-pocket costs. This is especially useful if you frequently pay medical expenses out of your own pocket due to insufficient coverage from a single plan.

Secondly, dual insurance provides coverage continuity. If one of your insurance policies lapses or ends, you won't have a gap in coverage as you'll still be covered by your second plan. This is advantageous for individuals who may lose their primary insurance due to job loss or other reasons.

Thirdly, dual insurance offers expanded coverage and benefits. Having two plans that cover different aspects of your medical care can fill gaps in your primary insurance, giving you more comprehensive coverage. For example, if your primary plan doesn't cover hospital stays, you can get a secondary plan that specializes in hospital care or vice versa.

Lastly, dual insurance provides a sense of security, especially for individuals approaching retirement age or with pre-existing medical conditions. Supplemental insurance plans can be purchased to cover specific needs, such as fertility treatments or cancer therapies, which may not be adequately covered by a single plan. Additionally, during retirement, Medicare may not cover all healthcare expenses, and a secondary plan can help cover additional costs like eye exams or dental care.

In conclusion, while dual insurance has its drawbacks, including double premiums and deductibles, it can be beneficial in specific scenarios by providing expanded coverage, reducing out-of-pocket costs, and ensuring continuity of coverage.

Common mistakes to avoid with dual insurance

Having dual insurance can be a strategic decision or the result of various circumstances. However, it is important to be aware of common mistakes that can occur when managing multiple insurance plans. Here are some key points to consider to help you avoid potential issues:

Understanding Primary and Secondary Insurance:

Know the difference between primary and secondary insurance. Primary insurance is responsible for paying first on any claims, while secondary insurance comes into play if the primary insurance cannot cover the entire claim. The Coordination of Benefits (COB) determines which plan is primary and which is secondary.

Double Billing:

Ensure that healthcare providers do not mistakenly bill both insurance plans for the same service. Review the Explanation of Benefits (EOB) from each plan and clarify any discrepancies with your providers.

Assuming Dual Coverage is Always Better:

Don't assume that dual coverage will automatically save you money. Evaluate the costs, coverage, and your specific healthcare needs to determine if having two plans is cost-effective for your situation.

Coordination of Benefits (COB) Issues:

Verify the COB to ensure there are no issues. For example, confirm which insurance plan is primary and whether it is still active. COB issues commonly occur with Medicare patients.

Incorrect Billing Order:

Do not bill both primary and secondary insurance at the same time. Bill the primary insurance first and, once you have received payment, submit a claim to the secondary insurance.

Incomplete Information:

When submitting a claim to the secondary insurance, include all necessary details such as the original claim amount, the amount paid by the primary insurance, and the reasons for any unpaid portions. Incomplete information may result in a claim denial.

Assuming Secondary Insurance Covers Primary Deductible:

Typically, the secondary insurance does not cover the deductible of the primary insurance. You are responsible for paying deductibles on both plans when making a claim.

Out-of-Network Providers:

Staying in-network can save you money. If a provider is out-of-network on your primary plan but in-network on your secondary plan, consider using the secondary plan as a safety net to access in-network benefits.

Not Comparing Plan Benefits:

Carefully compare the benefits of each plan to ensure they complement each other and provide additional coverage. Avoid overlapping coverage, where the benefits of both plans are redundant.

Not Considering Alternative Options:

Explore alternative options such as a Health Reimbursement Arrangement (HRA) or a health stipend from your employer, which can help with out-of-pocket expenses.

Frequently asked questions