Understanding Secondary Insurance: When It Becomes Primary

When a person has two health insurance plans, one is considered primary and the other secondary. The primary insurance is responsible for paying the claim first, as if it were the only source of health coverage. The secondary insurance then pays some or all of the remaining costs. This is called coordination of benefits, and it is sorted out by the insurance carriers involved. The insured person does not get to pick which plan is the primary one. This article will explain what to do when secondary insurance becomes primary.

Understanding which insurance is primary and which is secondary

There are a few rules to determine which insurance is primary and which is secondary. If an individual has coverage under their employer's plan and their spouse's or parent's plan, their own plan is usually primary. This is also true if the additional coverage is with TRICARE or Medicaid. In the case of minors or young adults covered under a parent's plan, the birthday rule applies. The parent whose birthday falls first in the year provides the primary insurance, and the other parent's insurance is secondary. If the parents share a birthday, the plan that has been active longer is primary. If the parents are divorced, the plan of the parent with custody is typically primary, unless there is a court order stating otherwise.

In some cases, having two health insurance plans can reduce out-of-pocket costs, especially if one plan has better coverage for a specific service. However, it's important to remember that having two plans can also mean paying two premiums and deductibles, which may increase overall expenses. Additionally, the secondary insurance company may not always pay the remaining costs after the primary insurer, and individuals may still be responsible for some out-of-pocket expenses.

Knowing how to process insurance claims

Step 1: Contact Your Insurance Agent

In the event of a loss or damage, reach out to your insurance agent immediately. Provide them with your name, address, policy number, and the date and time of the incident. Let them know how you can be contacted, especially if you cannot stay in your home. Follow up with a detailed letter describing the issue and keep a copy for your records. Your insurance agent will then arrange for an adjuster to assess the damage.

Step 2: Document Your Losses

Before entering any damaged building or area, always check for structural damage and never enter if there is a risk of collapse. When it is safe to do so, document your losses by creating a detailed list of lost or damaged property. Videotape and/or photograph the damage before beginning any repairs or clean-up. Do not throw away any damaged items without the adjuster's approval. Try to record the value of each lost or damaged item, using bills of sale, cancelled cheques, charge account records, or insurance evaluations.

Step 3: Protect Your Property

If possible, make temporary repairs to prevent further damage or theft. For example, cover damaged roofs with tarps and broken windows with boards or plastic. Move any household items at risk of weather damage to a safe location. Keep all receipts for any repairs or temporary accommodation, as these can be submitted to your insurance company for reimbursement.

Step 4: Work with the Adjuster

When the adjuster visits your property, ensure that you or a trusted advisor is present. The adjuster's job is to assist you and review your claim. They will inspect your list of lost or damaged items and work with you to calculate their value. Together, you will agree on the scope of the damage and what needs to be repaired or replaced. If you are unsure about any part of the process, ask the adjuster for written instructions.

Step 5: Settle Your Claim

You may settle personal property and structural claims separately, as this allows time to determine the full extent of your losses. Do not rush to settle your claim until you have a complete understanding of the damage. If you are unhappy with the settlement offer, discuss it with your agent and the adjuster. If you cannot reach an agreement, you may seek mediation through your state's department of insurance.

Step 6: Repair Your Home

You can contract a reputable, licensed, and insured firm to repair your home. Be cautious of door-to-door sellers and cheap repairs. Get a written estimate and always ask about any charges for providing an estimate. Your insurance company may initially pay you the actual cash value, withholding the full replacement cost until repairs are completed.

Understanding Primary and Secondary Insurance:

Now, let's discuss the difference between primary and secondary insurance and how it relates to processing insurance claims. When an individual has two health insurance plans, one is designated as the primary insurance, and the other becomes the secondary insurance. The primary insurance is responsible for paying claims first, up to its coverage limits. The secondary insurance then covers any remaining costs that are eligible under its health plan. This coordination between the two insurers is known as "coordination of benefits," ensuring that each plan pays its fair share without overlapping.

When it comes to determining which insurance is primary and which is secondary, it is often designated by a Coordination of Benefits form, which allows the policyholder to specify their preferred primary and secondary insurance. In cases where minors or young adults are covered by their parents' insurance, the "birthday rule" usually applies, where the parent whose birthday falls earlier in the year becomes the primary insurer.

How secondary insurance can help cover costs

Secondary insurance is additional coverage that can be purchased to improve your insurance coverage or expand your insurance benefits. It is important to understand how your insurance plans work together to get the most coverage.

When you have two health insurance plans, the insurers work together to determine which plan pays first and which one is considered secondary insurance. This process is called coordination of benefits, which decides the primary and secondary insurance. Coordination of benefits assures health insurance companies that they don't pay for more than 100% of the total medical costs.

The primary insurance policy is the policy that claims will be billed to first. The claim will process according to the patient's insurance plan with the primary insurance and payments will be made according to their benefits. Then, the claim will be sent to the secondary insurance company. If the patient's benefits with the secondary insurance company allow, additional payment may be made by the secondary insurance company.

Secondary insurance can help cover costs in the following ways:

Covering Remaining Costs

The primary insurance pays first when you get medical care, providing the coverage and cost-sharing specified in your policy. The secondary insurance pays second, helping to address any remaining costs or providing coverage for services your primary insurance plan excludes.

Access to More Medical Providers

Secondary insurance can give you access to more medical providers, such as out-of-network doctors, that your primary insurance may not cover.

Benefits for Uncovered Health Services

Secondary insurance can provide benefits for health services that are not covered by your primary insurance, such as vision, dental, or prescription drugs.

Paying Deductibles and Co-Payments

Secondary insurance can help pay deductibles and co-payments for your primary health insurance. For example, Medicare supplement plans are a popular option for seniors, helping to reduce the cost of medical services beyond what original Medicare offers.

Reducing Out-of-Pocket Costs

Having two health insurance plans can improve coverage and help lower out-of-pocket costs. However, it is important to note that you will likely have to pay two premiums and might still owe out-of-pocket costs at the end.

Scenarios where Medicare is the primary or secondary insurance

When you have two health insurance providers, one is designated as the primary health insurance plan and the other is the secondary insurance. The primary insurance is where health claims are submitted first. The secondary insurance will then pay for any remaining costs that are eligible for coverage under its health plan. This is called coordination of benefits, which ensures that both health plans pay their fair share without paying more than 100% of the medical costs.

Medicare is always primary when it is your only form of coverage. When you have additional insurance, predetermined coordination of benefits come into play to determine which form of coverage is primary and which is secondary.

Medicare as Primary Insurance

• Medicare is the primary payer for individuals with End-Stage Renal Disease (ESRD), regardless of whether they have other health coverage.
• If you are under 65, eligible for Medicare due to a disability, and have group employer coverage through a small or medium-sized employer with fewer than 100 employees, Medicare will be your primary payer, while your employer coverage is secondary.
• If you are 65 or older and have retiree insurance (insurance from former employment), Medicare is primary and retiree coverage is secondary.
• If you are still working and have employer-group insurance, Medicare is typically your primary coverage. If your employer has fewer than 20 employees, Medicare is generally considered the primary payer, and your group coverage is secondary.
• If you are a military retiree or spouse eligible for Medicare, you automatically qualify for TRICARE for Life (TFL). Medicare is the primary payer for any care you receive at a non-military facility.
• If you are under 65, eligible for Medicare due to a disability, and have group employer coverage through an employer with more than 100 employees, Medicare acts as your secondary payer, with some exceptions. One such exception is if you have end-stage renal disease (ESRD), in which case Medicare is the primary payer.

Medicare as Secondary Insurance

• If you are under 65, eligible for Medicare due to a disability, and have group employer coverage through an employer with more than 100 employees, Medicare is typically your secondary payer.
• If you are 65 or older, have group health plan coverage based on your or your spouse's current employment, and the employer has 20 or more employees, the group insurance plan is usually considered the primary payer while you are still working, and Medicare is secondary.
• If you are receiving workers' compensation, your workers' compensation policy will pay first if you are injured or become sick on the job. Medicare will pay second, but it will pay first for any medical service unrelated to the workers' compensation claim.
• If you are covered under the Federal Black Lung Program, the program is your primary payer, and Medicare pays second.
• Medicare does not coordinate with certain other healthcare programs, such as Medicare Advantage plans, Medicare and Marketplace insurance, or Veterans (VA) Benefits. In these cases, there is no coordination of benefits, and each policy pays independently.

It's important to note that whether Medicare is primary or secondary can depend on various factors, such as age, employment status, the size of the employer, and the reason for Medicare coverage.

How to resolve coordination of benefits issues

Coordination of Benefits (COB) is a process that allows insurance companies to work together to determine their fair share of costs for covered services. This is especially relevant when a person has dual health insurance coverage, which can reduce out-of-pocket expenses but also cause complications with the claims process.

Identify Primary and Secondary Insurance

Determine which insurance is primary and which is secondary. This is usually designated by a Coordination of Benefits form, which is filled out by the patient or their guardian. In the case of minors or young adults covered under a parent's insurance, the "birthday rule" is often applied, where the parent whose birthday falls first in the year holds the primary insurance. If the parents share a birthday, the primary plan is the one that has been effective longer. If the parents are divorced, a court order may determine which insurance plan is primary, or the birthday rule is applied.

Review Policy Documents

Thoroughly review the policy documents of all the insurance plans in question. Understand the coverage details, limitations, and any coordination of benefits guidelines outlined in each policy. This will help clarify the responsibilities of each insurer and identify potential discrepancies or challenges.

Notify Insurance Providers

Inform all your insurance providers about the existence of other insurance coverage. This step helps initiate the coordination process and ensures that each provider is aware of their role as primary or secondary coverage.

Submit Claims and Documentation

Follow the standard procedure for submitting claims to the primary insurance provider. Once the primary claim is processed, you will receive an Explanation of Benefits (EOB) detailing the coverage and outstanding amount. Keep a copy of the EOB for your records.

Notify Secondary Insurance

Inform the secondary insurance provider about the primary insurance's coverage determination. Provide them with a copy of the EOB from the primary provider, along with any necessary claim forms or additional documentation they may require.

Submit Secondary Claim

Fill out the required forms and submit a claim to the secondary insurance provider. Include relevant documentation, such as the primary EOB, itemized bills, and receipts. Adhere to the secondary insurance's submission guidelines to ensure a smooth process.

Monitor Reimbursements

Keep track of reimbursements from both insurance plans and compare them to the policy terms and the coordination of benefits process. This will help identify any discrepancies or inconsistencies in benefit payments.

Address Discrepancies

If you encounter any issues or discrepancies during the coordination process, reach out to both insurance providers for clarification. Open communication with the insurance providers will help resolve questions or concerns. If needed, involve your healthcare provider to provide additional documentation or clarification.

Frequently asked questions