Coordination of Medical Insurance Benefits

As more and more American families are forced to rely on multiple incomes to generate enough money to pay for living expenses, the instances of duplicate health insurance coverage continue to rise. While it may seem beneficial to be covered by more than one medical benefits plan, it’s essential that you understand how health insurance carriers deal with claims in these cases. Knowing what to expect and how double coverage affects the payment of your claims will save you time and reduce potential confusion.

Coordination of Benefits

Health insurance companies must work together to process claims made by patients covered under more than one medical policy to avoid accidentally overpaying physicians or facilities. Based on specific rules and guidelines addressing patients with more than one policy, a coordination of benefits must occur to properly disseminate information and payment. Clear and timely communication between insurance companies is essential for accurate and efficient processing of such claims.

The Birthday Rule

Your claims are processed first by your own medical policy, the primary carrier. Any remaining balance gets transferred to the next plan covering you, the secondary carrier. However, for dependents covered by two plans, insurance companies use the “birthday rule” to determine which policy is primary and which is secondary. The plan covering the parent whose birthday arrives earlier in the calendar year is always primary. If any balance remains after the primary plan pays its portion of that claim, the claim goes to the secondary carrier, who pays the balance up to the maximum available under that policy’s provisions.

Divorced Spouses

Children of divorced spouses may actually find themselves covered under two, three or even four health insurance plans if each natural parent remarries someone who also maintains family coverage. In such cases, the plan covering the natural parent with residential custody pays out first. If a balance remains, it gets shifted to the plan covering the new spouse of the parent with residential custody. If by some chance a balance still remains after the stepparent’s plan pays, that claim is forwarded to the noncustodial natural parent’s policy.

Stepchildren

As previously described, claims for stepchildren covered by multiple plans are first processed through the policy covering the parent with residential custody, then through the policy covering that parent’s new spouse. Only if a balance still remains after the primary and secondary plans pay does the claim get forwarded to the other natural parent’s coverage.

Article originally published on eHow Health (05/12/2011)