What Does "Primary Carrier" Mean Pertaining to Medical Insurance?

In today's society, a growing number of families require multiple streams of income to generate enough cash flow to support the current lifestyle. When more than one person in the household works for a company that provides group health insurance, the potential for confusion increases significantly.

Duplicate health coverage has become commonplace, resulting in streamlined and generally accepted practices in the majority of states regarding methods to determine which insurance carrier pays first.

Source: 401kCalculator.org

Coordination of Benefits

To avoid accidentally paying a medical treatment provider more than once for the same service, insurance companies must work together to appropriately protect themselves and pay out only those benefits to which the doctors are entitled.

Insurance companies must properly correspond and communicate regarding payment of claims, deductibles, co-pays, and unpaid balances.

Primary Carrier

The primary carrier is the insurance company that pays the first portion of any bills generated by the family members covered under that policy. Regardless of the actual cost of treatment, or the level of benefits provided by the policy, the primary carrier is responsible for processing a member's claim first.

Secondary Carrier

If an unpaid balance still remains after the primary policy pays, the leftover amount becomes the responsibility of the secondary carrier. This insurance company pays the remaining balance, up to the maximum benefits available under the provisions of that policy.

Birthday Rule

With regard to dependants covered under more than one medical plan, the majority of carriers use a method referred to as the "Birthday Rule" to determine which insurance company is primary. Regardless of the level of coverage afforded by each health plan, the one covering the parent whose birthday falls earlier in the calendar year is identified as primary. Dependant claims get processed and paid based on that health plan first, and any remaining balance is transferred to the other parent's policy.

References

Illinois Department of Insurance: Coordination of Benefits
HCV Advocate: Duplicate Health Coverage
Financial Web: Coordination of Benefits
Insure.com: "Birthday Rule" Determines Health Insurance Coverage

Resources (Further Reading)

Health Insurance In-Depth: 10 Essential Ingredients of a Good Health Insurance Plan

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This article is a Twisted Nonsense Exclusive! (04/14/2011)