How Is it Decided Which Health Insurance Company Is Primary?

Although not very common, sometimes people find themselves covered by more than one health insurance plan at the same time. A common question in such cases concerns which carrier should be the primary one paying claims. To address this issue, the insurance industry follows a standard protocol to determine who pays first.

Coordination of Benefits

• Coordination of benefits revolves around proper communication between health care professionals and insurance companies. Claims made by people with double coverage must be processed properly to ensure that providers receive only the amount to which they are entitled, and insurance carriers pay the correct amounts.

If You Are the Employee

• If you file a claim and remain covered by more than one health insurance policy, the one provided by your employer is designated as primary. Payment for medical treatment comes first from your employer's policy, and the bill gets paid up to the maximum benefit available under that policy for services rendered. Any remaining balance, if one exists, becomes the responsibility of the secondary insurance plan, and benefits get paid up to the maximum available. Any portion of the balance that remains unpaid after the claim is processed by the secondary policy becomes the responsibility of the patient.

If You Are a Dependant

• Claims filed for services provided to children covered by more than one health insurance plan get processed based on the birth dates of the parents, a practice commonly referred to as the "Birthday Rule." Financial Web explains that "The plan of the parent whose birthday comes first during the calendar year is designated as the primary insurer." When considering the parents' birth dates, only the month and day is relevant for this determination, and not the year in which a parent was born.

Exceptions

• Since family situations involving divorce, remarriage and step-children create potentially complicated situations, several exceptions to the birthday rule exist. If a court order mandates that one parent provide health insurance coverage, that parent's plan is primary, regardless of whether or not both parents' plans cover the children. If divorced parents both have medical plans covering the children, the plan held by the parent maintaining residential custody is primary. If one parent has coverage through an employer and remains actively at work, while the other parent has coverage under COBRA, the actively working parent's plan is primary. In all other situations where primary and secondary status becomes too complicated to determine based on existing rules and exceptions, and "when none of these rules determines the issue, the plan of the parent who has been covered longer is designated as primary."