Coordination of Benefits

Should You Have More Than One Insurance Plan?

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Coordination of Benefits. David McNew / Stringer/Getty Images

Having a good health insurance plan is great, but what if one had two or more health insurance plans? Does that mean they would get double the benefits? Not exactly, but having two or more health insurance plans does help cover any health insurance expenses better through the coordination of benefits provision.

First, many are probably thinking why would someone buy two health insurance plans... just one health insurance plan is expensive enough in this market!

That is true but many people are covered by two health insurance plans without paying the extra expense. The most common example is when two spouses both are working and both of their employers provide a health insurance plan. This would mean that someone who is a covered person under their employer's provided health insurance plan may also have coverage under their spouse's health insurance plan.

The good thing is that the health insurance plan providers have a coordination of benefits system that finds a way for both health insurance plans to pay their fair share. The coordination of benefits by both health insurance plan providers assists the providers in using the both health insurance plans in a way where they would avoid a duplication of benefits while still offering the plan coverages that the patient is entitled to.

The first way that health insurance providers coordinate benefits is to determine which health insurance plan of the patient would be considered the primary plan and which health care plan of the patient would be considered the secondary plan.

There are guidelines set forth by the state and insurance providers that help the patient's insurance company determine which health care plan will be considered the primary and secondary health insurance plans.

Once the covered patient's primary plan is determined, the benefits that the patient is eligible for under the primary plan must be given without assuming there is a secondary plan.

In other words, once a primary plan is established that primary plan will pay what it is supposed to pay regardless of the existence of any other secondary plan that may be available, just as if the primary plan was the only plan the patient had. Once the primary plan has paid what expenses they should pay as determined by the coordination of benefits provision, then the secondary plan may be used.

The secondary health insurance plan, unlike the primary health insurance plan under the coordination of benefits, can take into consideration what health insurance benefits were provided to the patient in the primary health insurance plan. The remaining allowable health care costs due will then be considered for payment under the secondary health insurance plan.

Coordination of benefits is a great system that the health insurance plan providers have been able to administer to those who have more than one health insurance plan covering them. And, it seems as though one with more than one health insurance plan should not have to pay a single dime under the coordination of benefits. Unfortunately, this is not always the case.

There are some guidelines that the health insurance providers follow that could cause one covered under the coordination of benefits process to still have to pay for some of their medical costs.

One such area is the "reasonable and customary" amount.

Even if a patient has more than one health insurance plan, the health insurance companies still follow the same rules in how they pay for services. Most health insurance will only cover the amount that is reasonable or customary, which would mean the health insurance provider will not pay for any services or supplies that are being billed at a cost that is more than what is the usual charge for the immediate area. Therefore once the primary plan pays the reasonable and customary amount there may still be a balance due on a particular health care service if the health care provider was charging more than what the primary health insurance plan felt was reasonable and customary. The secondary health insurance plan is not required to pay the remaining amount that the primary insurance did not pay so the patient could still end up having to pay out-of-pocket even if they have two health insurance plans.

In addition, neither health care plan will cover the cost of a service that is excluded under their health care plans.

Coordination of benefits is great for health care providers and patients. If one is fortunate enough to have more than one insurance plan, the coordination of benefits provision should help cover most of their health care expenses. Anyone with more than one health care plan should discuss with their health insurance providers how the coordination of benefits provision will work with their plan to get a better understanding of what health insurance coverage is available to them.