Alyssa Lane
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. COB regulations may be set up by a state or federal government, or, in the case of large employer group plans, by the employer. The determination of which insurance is primary and which is secondary depends on the individual's unique situation, such as their current health insurance, travel destination, and risk tolerance.
| Characteristics | Values |
|---|---|
| Number of plans | Two health insurance plans |
| Payer | The primary payer pays up to its coverage limits, then sends the remaining balance to the secondary payer |
| Cost | Secondary coverage plans are generally more affordable than primary ones |
| Coverage | Primary coverage pays out first, regardless of any other insurance held |
| Claims | Primary coverage eliminates the hassle of dealing with multiple insurance providers |
| Circumstances | When a member has double insurance, their individual circumstances determine which insurance is primary and which is secondary |
| Coordination of benefits (COB) | A framework that ensures both health plans pay their fair share without paying more than 100% of the medical costs |
| Birthday rule | When parents have separate plans and a child is on both, the parent whose birthday comes first in the year holds the primary health plan |
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What You'll Learn
Primary insurance
The coordination of benefits decides which plan pays first (the primary plan) and which pays second (the secondary plan). When there is a health insurance claim, it first goes to the primary plan, which pays what it owes. If money is still left on the bill, it then goes to the secondary insurer, which pays what it owes. After that, if there is still money left on the bill, the member gets a bill for the remaining money.
In the context of travel insurance, primary coverage pays out first, regardless of any other insurance the policyholder may have. If a covered medical expense is incurred while travelling, the travel insurance provider reimburses the policyholder directly without requiring them to file a claim with their primary health insurance first. Primary coverage is generally more suitable for those without strong health insurance coverage abroad, those seeking a faster claims process, and adventure travellers or those at higher risk of injury.
In the United States, Medicare is the federal government health insurance programme that provides health care coverage for individuals aged 65 or older, those under 65 who receive Social Security Disability Insurance (SSDI) for 24 months, those who begin receiving SSDI due to ALS/Lou Gehrig's Disease, and those with End-Stage Renal Disease (ESRD). Medicare is usually considered primary if the worker is 65 or older and their employer has fewer than 20 employees. A private insurer is primary if the employer has 20 or more employees.
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Secondary insurance
The secondary payer reviews the remaining bill and pays up to its limits. If there is still a balance remaining, the patient is responsible for paying it. This process is known as "coordination of benefits" (COB), which ensures that each insurance company pays its fair share without overlap. COB regulations may be set by state or federal governments, or large employer groups may create their own rules.
Determining which insurance is primary or secondary depends on individual circumstances. For example, for married couples with children, the "birthday rule" applies, where the parent with the earlier birthday in a year is considered the primary insurer. In the case of employer-sponsored insurance, the company's plan is typically primary, while the spouse's plan is secondary. Medicare is usually the primary payer if the worker is 65 or older and their employer has fewer than 20 employees; otherwise, private insurance is primary.
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Coordination of benefits (COB)
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 individual receives the maximum coverage from multiple health plans and reduces their out-of-pocket costs.
COB rules also help to prevent overpayment or duplicate payments. Plans will not pay more than 100% of the cost of the medical services, meaning the combined benefits shouldn't surpass the total cost of the treatment. This is achieved by determining which insurance plan has primary payment responsibility and the extent to which the other plans will contribute.
There are various scenarios in which an individual might have two health insurance plans. For example, some seniors may continue to work past the age of 65, in which case both Medicare and an employer-based plan can cover them. In this case, the employer's group health plan is the primary payer if the company employs 20 or more people. Medicare is the secondary payer and determines what portion of the balance of the bill, if any, it will pay.
In another scenario, an individual might have their own insurance plan and also be covered by their spouse or partner's plan. In this case, the individual's own insurance plan is considered the primary payer, while the spouse or partner's plan is secondary.
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Medicare
There are two main ways to get your Medicare coverage: Original Medicare and Medicare Advantage. Original Medicare includes Part A (Hospital Insurance) and Part B (Medical Insurance). You can sign up for these parts during specific enrolment periods. Original Medicare covers most, but not all, of the costs for approved health care services and supplies. It is important to note that Original Medicare does not cover prescription drugs, but you can add this coverage by enrolling in a separate Medicare drug plan.
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 remaining balance to the "secondary payer". This coordination ensures that your bills are paid correctly.
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Travel medical insurance
When an individual has two health insurance plans, the primary insurance pays the first portion of the claim up to the coverage limits. The secondary insurance then reviews the remaining bill and covers some or all of the outstanding costs. This process is known as coordination of benefits (COB) and ensures that both health plans pay their fair share without paying more than 100% of the medical costs.
The cost of travel medical insurance varies depending on the country and the chosen policy. It is important to compare travel insurance quotes and consider customer reviews to find the right coverage for one's trip.
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Frequently asked questions
Primary health insurance covers your basic medical expenses, including doctor's visits, lab tests, and prescription drugs.
Secondary health insurance is a separate plan that offers additional benefits to complement your primary health plan. It can help cover costs that your primary insurance does not, such as vision, dental, or accidental injury.
Secondary health insurance can help reduce out-of-pocket costs. For example, if your primary plan does not fully cover a hospital stay, secondary insurance can provide additional funds. It also ensures continuous coverage if one of your health insurance policies lapses.
The determination of which insurance is primary and which is secondary depends on the situation and is decided through a process called "coordination of benefits" (COB). For example, if both parents have a family plan that covers their child, the parent whose birthday comes first in the calendar year provides the primary insurance.
Having secondary health insurance may lead to double premiums and deductibles, which can be costly and confusing. It is important to carefully consider your situation and understand the coverage provided by each plan.
