Can a Person Have Two Health Insurance Plans?

It is generally permissible for an individual to have more than one health insurance plan. This arrangement, often called dual coverage, can arise from various life circumstances and employment situations. While most people have a single health insurance policy, approximately 6% or 20 million Americans navigate the complexities of multiple plans. Understanding how these plans interact is important for managing healthcare costs and maximizing benefits.

Situations Leading to Multiple Health Insurance Plans

Several common scenarios can lead an individual to be covered by more than one health insurance policy. A frequent occurrence involves spousal coverage, where both partners have employer-sponsored health plans and one or both elect to cover the other as a dependent. This results in each spouse having their own primary coverage while also being a dependent on the other’s plan.

Another common situation arises for individuals eligible for Medicare who continue to work. They may retain their employer-sponsored health benefits alongside their Medicare coverage. Similarly, someone transitioning between jobs might have overlapping coverage, such as COBRA from a previous employer and a new employer’s health plan. In these instances, COBRA typically acts as the secondary payer if there is also active employer coverage.

Young adults, particularly those under the age of 26, often remain on a parent’s health plan while also obtaining their own coverage through an employer or a student health plan. For children of divorced or separated parents, it is also common to be covered under both parents’ health insurance policies. Additionally, individuals who qualify for government assistance programs like Medicaid or the Children’s Health Insurance Program (CHIP) may also have private health insurance, with the government program often supplementing the private coverage.

How Benefits are Coordinated

When an individual has more than one health insurance plan, the process by which these plans determine their payment responsibilities is called Coordination of Benefits (COB). COB rules ensure that combined payments from all plans do not exceed 100% of total medical expenses. The primary insurer pays its portion of the claim first, and any remaining eligible costs are then submitted to the secondary insurer.

Specific rules dictate which plan is primary and which is secondary. For individuals covered by their own employer’s plan and also as a dependent on a spouse’s plan, their own employer-sponsored coverage is generally considered primary. The spouse’s plan then acts as the secondary payer. For children covered by both parents’ plans, the “birthday rule” typically applies. Under this rule, the plan of the parent whose birthday falls earlier in the calendar year (month and day, not year) is usually primary.

When an individual has both active employer-sponsored coverage and COBRA, the active employee’s plan is typically primary. For those with Medicare and employer-sponsored coverage, the size of the employer determines which plan is primary. If the employer has 20 or more employees, the employer’s health plan is generally primary, and Medicare is secondary. Conversely, if the employer has fewer than 20 employees, Medicare usually serves as the primary payer. After the primary insurer processes the claim and pays its portion, the secondary insurer reviews the remaining balance and may cover additional costs according to its policy terms.

Impact on Out-of-Pocket Costs

Having a secondary health insurance plan can significantly influence an individual’s out-of-pocket expenses for covered medical services. After the primary plan processes a claim and pays its share, the remaining balance, which may include deductibles, copayments, or coinsurance, is then submitted to the secondary plan. The secondary insurer may then cover some or all of these remaining costs, effectively reducing the amount the individual would otherwise owe.

For instance, the secondary plan might pay a portion of the deductible that the primary plan did not cover. It can also contribute towards copayments or coinsurance, which is a percentage of the service cost after the deductible has been met. While dual coverage can help reduce these financial burdens, it does not guarantee zero cost.

The extent of the financial benefit depends on the specific terms and benefits of both the primary and secondary plans. There may still be out-of-pocket responsibilities if a service is not covered by one or both plans, if there are differences in allowed amounts between the insurers, or if provider networks do not align. A secondary plan often provides additional coverage and can lower overall healthcare expenditures.