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What is the Coordination of Benefits?

Mary McMahon
Updated May 16, 2024
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Coordination of benefits is a practice used to ensure that insurance claims are not paid multiple times when someone is insured under multiple insurance plans. The idea behind it is that someone on multiple plans might be tempted to submit claims to all of them, pocketing the excess cash. If healthcare benefits are coordinated, the insurance companies share the burden without overpaying, and the insured is fully covered, but not covered to excess.

Situations in which people are covered by multiple plans most commonly arise when two partners both receive healthcare benefits through their jobs. These benefits are typically expanded to spouses and domestic partners, so as a result, each partner is covered by two health plans. This may also extend to children in the relationship if dependents are automatically covered.

Under coordination of benefits, one insurer is designated as the primary insurer, which means that claims are sent to this company first. In the case of Sue and Bob Jones, Sue's primary insurance company would be the company that insures her through her job, while Bob's primary insurance would be provided through his work-related insurance. If the primary insurer refused to pay a claim or did not pay a claim in full, the claim would be passed to the secondary insurer.

In a hypothetical scenario where Sue Jones requires a surgical procedure that costs $5,000 US Dollars (USD), the bill would be submitted to her primary insurer. The insurance company might pay for the procedure, less a $500 USD deductible, leaving Sue with a balance of $500 USD due. She could submit a claim to her secondary insurer, and they would cover the $500 USD remainder. Her primary insurer might also refuse to pay for the procedure altogether, arguing that the specific procedure isn't covered under its plan, in which case the entire $5,000 USD claim would go to the secondary insurer.

Children can also be covered under coordination of benefits, with the “birthday rule” usually being used to determine which insurance company is the primary insurer. Under the birthday rule, the insurance company associated with the parent with a birthday earlier in the year would be the primary provider for the children. If Bob is born in January and Sue is born in March, Bob's insurance would be the primary provider for their children.

By coordinating the health benefits, claims are not overpaid. It allows people to get the medical care they need without any confusion about which insurance company will pay for it, thereby keeping insurance costs reasonably low. People who do not want to worry about this issue can choose to opt out of insurance plans that would otherwise cover them. Parents should definitely consider this, as adding children to a work-provided insurance policy usually costs extra, and it may make more sense for the children to be insured by one parent alone, rather than both.

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Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments
By anon997398 — On Jan 02, 2017

Concerning COBRA, in a "perfect world" scenario the COBRA plan would be secondary. However, because of how some states have written their laws, they may or may not follow the COBRA rule. Each plan has its own set of rules when it comes to COBRA.

Let me give you an example. Self insured groups, since they fund their own insurance for their employees, can make up their own COB rules. However, for those smaller employers that cannot afford to fund their own insurance, these are called fully insured. Georgia has a mandate that states that fully insured groups are not required to follow the COBRA rule. But if that group wishes to, then they may follow COBRA. They must at the very least abide by the law, but they can always go above and beyond. In order to make a correct primacy determination, we would have to look at both plans to make sure that they will, or will not follow COBRA. If they both follow COBRA, then certainly, the COBRA plan would be secondary.

However, if one plan follows COBRA, and the other does not, then 99 percent of the time, there is a stipulation in the contract that states something to the effect, "if the other plan does not follow Continuation of Coverage (COBRA), revert to the next rule," in which Length of Coverage (which plan was in effect first, based off election of benefits or hire date) would determine which is supposed to pay primary.

By anon928824 — On Jan 29, 2014

@mooser and @faithstewart: If you have health insurance through your work and your husband has it through his work then your policy is primary to you and his policy is primary to him.

"Under coordination of benefits, one insurer is designated as the primary insurer, which means that claims are sent to this company first. In the case of Sue and Bob Jones, Sue's primary insurance company would be the company that insures her through her job, while Bob's primary insurance would be provided through his work-related insurance."

By anon338163 — On Jun 11, 2013

I found out that I have health care through my job and it is considered my primary insurance. I have been using my husband's health care plan because he got me on three years ago when I was unemployed.

I am wondering if I should try to coordinate benefits now with this insurer, but wondering if there are any legal repercussions if I do this now at such a late point in time?

By anon334804 — On May 15, 2013

If the wife has family coverage covering two dependents already, when the husband's new insurance kicks in, does he have to take family coverage or can he just take the individual plan because it's less expensive, even though his birthday comes first?

By anon327451 — On Mar 27, 2013

What if one's insurance is a cobra plan are they always secondary?

By anon249755 — On Feb 22, 2012

There are actually multiple ways COB can be calculated. The following are per the National Association of Insurance Commissioners. However, while these are the standard, they do not represent a complete listing of all methods currently in use. The actual calculation methods can vary based on state law or per the terms stated in an insurance plans contract with a health care provider.

1) Non-Duplication: Both plans calculate payment as if no other carrier were involved and the primary pays per its calculation.

The secondary pays the balance if its calculation shows it would have paid equal or more than the primary. Otherwise, the subsequent plan pays the amount per its calculation were it the sole payer.

2) Full COB: The secondary pays the greater of (what it would have paid if it were primary minus the primary payment) and 0)

3) Supplemental COB: The secondary plan pays the balance of the allowable expenses after the primary plans payment less any applicable co-payments, coinsurance and deductible.

Of the three listed, supplemental would be the least common.

By anon188674 — On Jun 21, 2011

This example of a $5000 doctor bill is not explained in full. The secondary insurance company would only pay 100 percent of that remaining deductible if it was a 100 percent plan. If the spouse had a deductible/co-insurance plan, those amounts need to be met first.

By anon179353 — On May 23, 2011

My primary insurance covered everything except the deductible. Shouldn't the deductible cover that deductible that the primary insurance did not cover?

By anon174745 — On May 11, 2011

I have two full-time jobs with health insurance for both. My wife does not work. Which insurance is her primary and which is her secondary?

By anon169274 — On Apr 20, 2011

Actually, that is incorrect. The husband's plan would be primary for him, the wife's plan would be primary for her, and then the birthday rule would apply for the children covered under both plans. The plan that covers a person as the subscriber is always primary unless Medicare is involved.

By mooser — On Jan 26, 2011

@faithstewart, the birthday rule mentioned in the article applies in that situation too. For example, my husband and I both carried family coverage through our respective employers for a short time. The primary policy for each of us was mine, because I was born in March and he was born in December.

By faithstewart — On Jan 24, 2011

If both spouses have family coverage on their respective plans, which policy is the primary and which is the secondary?

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

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