Cob Change Insurance: Protecting Your Coverage

Coordination of Benefits (COB) is a process that insurance companies use to determine which insurance plan is the primary payer and which is the secondary payer when a person is covered by multiple health plans. This coordination ensures that the insurance companies do not pay more than the total claim amount and that the patient's out-of-pocket expenses are minimised. COB is particularly relevant when an individual has dual health insurance coverage, either through their own insurance and that of their spouse or partner, or through their employer and a secondary source. In the case of dependent children, the birthday rule often applies, where the primary payer is the insurance of the parent whose birthday falls first in the year. COB helps to streamline the claims process and ensure that patients receive the maximum coverage available to them.

When COB comes into effect

Coordination of Benefits (COB) is a process that comes into effect when an individual is covered by more than one health insurance plan. It clarifies how multiple insurance plans work together to pay a claim for a single person. COB determines which plan is the primary payer and which is the secondary payer.

There are three main scenarios in which COB comes into effect:

Scenario 1:

You are covered under your own insurance plan with your employer and also covered as a dependent under your partner's plan. In this case, your insurance plan is the primary payor, and your partner's insurance plan is the secondary payor. You would submit a claim to your insurance plan first and, if it doesn't cover the full amount, you can then submit the remainder to your partner's insurance plan.

Scenario 2:

Your partner is covered under their own insurance plan with their employer and is also covered as a dependent under your plan. Here, the primary payor is your partner's insurance plan, and the secondary payor is your insurance plan. Your partner would submit a claim to their insurance plan first and then submit any remaining balance to your insurance plan.

Scenario 3:

Your dependent child(ren) has coverage under both your and your partner's insurance plans. The primary payor is determined by the parent whose birthday falls first in the calendar year. If you share the same birthday, the primary payor is the insurance plan that has provided coverage for the longest time. If you have joint custody of your children and are each remarried or living with a new partner, the plan of the parent whose birthday comes first in the calendar year is the primary payor, followed by the plan of their spouse, then the plan of the second parent, and finally, the plan of the spouse of the second parent.

In all scenarios, the primary plan is responsible for processing the claim first and paying its share of the coverage amount. The secondary plan then reviews the claim and pays the remaining balance within its coverage limits. This ensures that the combined benefits do not surpass 100% of the total claim amount, avoiding duplicate payments.

Primary and secondary payers

When an individual has two insurance plans, the Coordination of Benefits (COB) is the process by which a health insurance company determines if it should be the primary or secondary payer of medical claims. The primary payer is the insurer that pays a healthcare bill first. The secondary payer covers the remaining costs, such as coinsurances or copayments.

In the case of dual health insurance coverage, the individual's own insurance plan is considered the primary payer, while the insurance plan of their spouse or partner serves as the secondary payer. This ensures that the individual's primary plan covers most of the expenses, with the secondary plan potentially covering additional costs that may remain after the primary plan's benefits have been exhausted.

When it comes to health coverage for dependents, the "birthday rule" is often applied. The plan covering the parent whose birthday falls first in the year will be the primary payer for the children, while the other parent's plan becomes the secondary payer. If both parents share the same birthday, the plan of the parent whose name comes first alphabetically will be the primary payer.

Medicare can also work alongside other health insurance plans as either the primary or secondary payer. For individuals with Medicare and employer-sponsored healthcare plans, Medicare is typically the primary payer if the employer has fewer than 20 employees, and the secondary payer if the employer has 20 or more employees.

Scenarios requiring COB

• Dual health insurance coverage: When an individual has their own insurance plan and is also covered by their spouse or partner's plan. In this case, the individual's insurance plan is primary, and the spouse or partner's plan is secondary.
• Health coverage for dependents: When children are covered by both parents' insurance plans, the "birthday rule" is often applied. The insurance of the parent whose birthday falls first in the year becomes the primary payer, and the other parent's insurance is secondary. If the parents share a birthday, the plan that has provided coverage for a longer period is usually primary.
• Medicare and other health insurance: If an individual is eligible for Medicare and also has an employer-sponsored group health plan, coordination of benefits is necessary to determine which plan is primary and secondary.
• COBRA and employer coverage: COBRA allows individuals to continue their group health coverage after losing their job, but it may impact the coordination of benefits with their new employer-sponsored coverage.
• Multiple insurance plans: When a patient is enrolled in multiple insurance plans, there may be an overlap in their benefits. In this case, coordination of benefits is necessary to determine the primary and secondary providers to avoid duplicate billing issues.
• Medicare and supplemental insurance: Many Medicare-eligible patients also have a Medicare supplemental plan, such as AARP. While Medicare typically automatically crosses the claim over to the supplemental insurance, it is important for providers to document all insurances for the patient to avoid issues.

How COB works

Coordination of Benefits (COB) is a standard insurance industry system for the payment of claims when an individual is covered by two or more group health or accident policies (double coverage). When Double Coverage exists, one plan is considered primary (pays its benefits first) and the other plan is secondary. After the primary plan has paid its benefits, the secondary plan will coordinate (supplement) benefits with the primary's payment, allowing a combined payment of up to, but not more than, 100% of covered charges.

There are three main scenarios when coordination of benefits comes into effect:

Scenario 1: You're covered under your own insurance plan with your employer, and covered as a dependent under your partner's plan.

Scenario 2: Your partner is covered under their own insurance plan with their employer, and covered as a dependent under your plan.

Scenario 3: Your dependent child(ren) has coverage under both your and your partner's insurance plans.

In all scenarios, there is a primary and secondary payor, which determines which insurance plan you should submit a claim to first. The primary payor is always your own insurance plan, and the secondary payor is your partner's insurance plan. This means you'll submit a claim to your own insurance plan first. If your insurance plan doesn’t cover the full claim amount, you can submit the claim to your partner's insurance plan, with the explanation of benefits statement, and request payment for the remainder of the balance.

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.

COB relies on many databases maintained by multiple stakeholders, including federal and state programs, plans that offer health insurance and/or prescription coverage, pharmacy networks, and a variety of assistance programs available for special situations or conditions.

Potential challenges and solutions

Delayed Claims Processing

Challenge: Coordinating claims between primary and secondary insurers can cause delays in processing.

Solution: Submit all required documentation promptly and follow up with both insurance providers to ensure timely processing. Address any delays immediately.

Discrepancies in Benefit Payments

Challenge: Inconsistencies may arise in how benefits are calculated and paid by primary and secondary insurers.

Solution: Carefully review the Explanation of Benefits (EOB) from both insurers. Contact the providers to resolve discrepancies and ensure accurate payment.

Resolving COB Disputes

Challenge: Disputes may occur between primary and secondary insurers regarding payment responsibility and amounts.

Solution: Communicate openly with both insurers to understand their policies and resolve disputes. Involve your healthcare provider if necessary to provide additional documentation and clarification.

Complex Coordination Guidelines

Challenge: Understanding and adhering to the coordination guidelines of multiple insurance plans can be challenging.

Solution: Familiarize yourself with the coordination of benefits rules outlined in each policy. Contact the insurers for clarification if needed, and consider seeking assistance from a healthcare advocate or insurance specialist.

Overlapping Deductibles and Out-of-Pocket Costs

Challenge: Coordination of benefits may result in overlapping deductibles or out-of-pocket expenses.

Solution: Anticipate and budget for potential overlapping costs. Understand the deductible and out-of-pocket limits of each plan to make informed decisions about your healthcare expenses.

Limited Provider Networks

Challenge: Different insurance plans may have varying networks of healthcare providers, leading to restrictions.

Solution: Whenever possible, select healthcare providers who are in-network for both insurance plans to maximize coverage and minimize complications.

Communication and Record-Keeping

Challenge: Ensuring consistent communication between insurers and tracking claims and payments can be challenging.

Solution: Maintain organized records of all communications, claims, EOBs, and payments. Utilize digital tools or apps to efficiently manage your insurance information.

Frequently asked questions