What happens when one is covered by two insurance plans?
When an individual is covered by two insurance plans, the situation is referred to as "coordination of benefits" (COB). Insurance companies have established rules and procedures to determine which plan is primary and which is secondary in paying for covered medical expenses. The primary plan is typically the one through which the person is currently employed or has the most extensive coverage.
Here's what generally happens when one is covered by two insurance plans:
1. Primary Payer: The primary insurance plan is responsible for paying its share of the covered medical expenses first. It processes the claim and makes a payment according to its coverage limits and terms.
2. Secondary Payer: After the primary insurance plan has paid its portion, the secondary insurance plan comes into effect. It reviews the amount paid by the primary plan and pays for the remaining eligible expenses up to its own coverage limits.
3. Coordination of Benefits Clause: Insurance policies usually include a COB clause that outlines the rules for determining the order of payment and how the benefits from each plan will be coordinated.
4. Overlap in Coverage: If there is overlap in coverage between the two plans, meaning they cover the same expenses, the secondary plan may reduce or eliminate its payment accordingly to avoid duplication of benefits.
5. Excess Coverage: Sometimes, the combined coverage from both plans may exceed the actual medical expenses incurred. In such cases, the secondary plan may not make any payment as there is no remaining financial responsibility after the primary plan's payment.
6. Subrogation Rights: Insurance companies may have subrogation rights, which means they can seek reimbursement from other responsible parties or insurance plans for payments made on behalf of their insured.
7. Out-of-Pocket Costs: Depending on the COB arrangements and coverage levels, the individual may still be responsible for any remaining out-of-pocket costs not covered by either plan.
8. Communication with Insurance Companies: It's important to notify both insurance companies that you have dual coverage and provide them with the necessary information to facilitate the coordination of benefits and ensure accurate payment of claims.
9. Claim Submission: You may need to file separate claims with each insurance company, providing relevant documentation and information as required.
10. Coordination Assistance: If you encounter any challenges or confusion regarding the coordination of benefits between the two plans, you can contact the customer service departments of your insurance companies for assistance.
It's advisable to familiarize yourself with the terms and conditions of both insurance plans to understand how your coverage works and what to expect in case you need to utilize both plans for medical expenses.