Some members are covered by two group health insurance plans at the same time. The most common example of this is a married couple, where both the husband and wife have insurance through their employers.
In situations like this, we may coordinate the benefits of both insurance carriers, which means that both carriers will cover a portion of the claims.
The advantages of Coordination of Benefits
COB has the following positive financial impacts:
Member impacts
Member's out-of-pocket expense is reduced or eliminated.
Example:
A member submits a claim with a total cost of $100. The member has a 20% coinsurance through the primary insurer (Insurer A).
Insurance carrier A covers $80
Insurance carrier B covers the remaining $20
The member's out-of-pocket expense is $0
Insurance carrier impacts
It helps keep health care costs lower:
Because two insurance carriers are coordinating payments, they avoid overpaying and duplicate payments (e.g., both carriers pay the full cost of the claim because they're unaware of other coverage).
Each carrier pays a portion of the claim, keeping the financial impact low for both carriers.
The Coordination of Benefits process
The following list outlines the steps involved in the COB process:
1.) At enrollment, members are asked if they have other health insurance. If they do, we ask them to provide us with their other insurance carrier's information.
2.)We update the member's eligibility records to indicate that the member has other insurance.
3.) Claims are submitted to the member's primary insurance carrier first. The primary insurance pays the amount covered by their benefit. The claim is forwarded to the member's secondary insurance. The secondary insurance pays the amount covered by their benefit.
4.) We ask members to update their records yearly, indicating whether or not they still have two insurance carriers.
Determining primary & secondary coverage
Before insurance carriers can coordinate benefits, we have to identify which carrier will be the primary payer on claims, and which carrier will be the secondary payer.
The rules for determining which carrier will be the primary payer on claims can be complicated, depending on the facts of your situation. Here are three common rules we use to determine this:
Method
Explanation
Birthday Rule
Used for dependent children only. Generally, if children are covered under both parents, the parent whose birthday is earlier in the year has primary coverage.
Divorce Decree
Used for dependent children only. In a divorce situation, the court may dictate which parent or guardian is the primary carrier.
Spousal Coverage
Used for spouses covering each other (duplicate insurance). The carrier covering the person as a subscriber is primary. The carrier covering the person as a dependent is secondary.
Example: Dick and Jane are both insured through their employers, both cover each other as spouses under their employers, and both are currently working.
Dick, as the subscriber under his insurance, would submit claims to his insurance first, then to Jane’s insurance second, as she is a dependent.
Jane, as the subscriber under her insurance, would submit claims to her insurance first, then to Dick’s insurance second, as he is a dependent.
Lack of information can cause a delay in claims processing
The most challenging issue a member can encounter is having claims held up because we don't have complete information regarding their other insurance carrier. This commonly occurs at the following times:
Open enrollment: Our enrollment forms have a section dedicated to capturing information about a member's other insurance carrier. If the member doesn't fill this out completely and correctly, we'll hold claims until we receive the missing information.
Annual update: Once per year, we send a letter to our members asking them to provide us updated information regarding their other insurance coverage. If they don't provide us with complete and accurate information, we'll hold claims until we receive it.
How do you ensure your records are correct?
There are two ways a member can make sure that their records are complete and correct:
The subscriber may update the records of anyone covered by their policy on mymedica.com. Spouses and dependents cannot update their records on mymedica.com.
Any member may update their records by calling Medica Customer Service at the number on the back of their ID card. However, members 12 years or younger may not update their records – this must be done by the subscriber or spouse.
Make sure you know the rules that apply to your situation
This article is intended to be general information about how COB works. The provisions of your benefit plan apply to your specific situation and they supersede all of the information contained in this article.
To understand the rules that apply to your specific situation, please contact Customer Service at the number on the back of your ID card.
