Can You Choose Which Insurance Is Primary?

When individuals have more than one health insurance policy, understanding how these plans interact is important for managing healthcare finances. Navigating multiple coverages can be complex, but knowing how benefits are applied ensures claims are processed efficiently and helps manage out-of-pocket costs.

Understanding Primary and Secondary Insurance

When a person is covered by multiple health insurance plans, these plans are categorized as either primary or secondary. The primary insurance plan is the one responsible for paying medical claims first, up to its coverage limits and according to its terms. After the primary plan has processed a claim and paid its portion, the secondary insurance plan may then review the remaining balance. This secondary plan can cover additional eligible expenses, such as deductibles, copayments, or coinsurance, depending on its own policy terms.

The process by which insurers determine which plan pays first and how remaining costs are covered is known as Coordination of Benefits (COB). COB rules prevent duplicate payments for the same medical services, ensuring combined payments from all plans do not exceed the total cost of care. This framework allows health plans to contribute their fair share, ensuring claims are paid correctly and efficiently.

How Primary Status is Determined

Individuals generally cannot choose which of their health insurance policies is primary. Instead, primary status is determined by a set of established rules, regulations, and specific terms outlined within insurance policies. These rules are standard industry practices, and many are mandated by law or guided by regulatory bodies, leaving little discretion for the policyholder. The National Association of Insurance Commissioners (NAIC) has developed model coordination of benefits guidelines, which many states have adopted or used to create their own rules for consistency.

One common rule for dependent children covered by both parents’ plans is the “Birthday Rule”. Under this rule, the health plan of the parent whose birthday falls earlier in the calendar year (month and day, not year) is considered primary for the child. If both parents share the same birthday, the plan that has covered the person longer typically becomes primary. This rule helps standardize the order of benefits and avoids disputes between insurers.

For individuals with Medicare and employer-sponsored plans, Medicare Secondary Payer (MSP) rules dictate which plan pays first. If an individual is 65 or older and covered by an employer’s group health plan, the employer plan is generally primary if the employer has 20 or more employees. Medicare would then be secondary. However, if the employer has fewer than 20 employees, Medicare typically becomes the primary payer, with the employer plan acting as secondary.

Rules also exist for individuals with active employment plans versus continuation coverage, such as COBRA. Generally, the plan covering an individual as an active employee is primary, while coverage obtained through COBRA or other continuation rights is secondary. Similarly, if a person has coverage as an employee and also as a dependent on another plan (e.g., a spouse’s plan), their own employer-sponsored plan is usually primary.

Common Scenarios for Coordination of Benefits

The rules for determining primary and secondary insurance apply across various common situations. When spouses each have their own health plans and also cover each other as dependents, the plan covering an individual as an employee is typically primary for that individual. The spouse’s plan, where they are covered as a dependent, would then be secondary.

For children covered by both parents’ health insurance, the Birthday Rule is applied. For instance, if one parent’s birthday is in April and the other’s is in September, the plan of the parent with the April birthday would be primary for the child, regardless of the parents’ ages. This rule ensures a consistent method for determining primary coverage for dependents. In cases of divorced or separated parents, the plan of the parent with custody generally provides primary coverage, or as specified by a court order.

When an individual has COBRA coverage and also obtains another health plan, the other plan is often primary. For example, if someone has COBRA and then gains coverage through a new employer, the new employer’s plan generally becomes primary. COBRA would then serve as secondary coverage. Additionally, supplemental plans, such as Medigap or some short-term disability policies that pay medical bills, are designed to pay after a primary health plan has processed the claim, covering remaining out-of-pocket costs.

The Coordination of Benefits Process

When multiple health insurance policies are in effect, a specific procedural flow ensures claims are processed correctly. Healthcare providers generally submit the claim to the primary insurer first. This initial submission includes all necessary documentation, such as medical bills and details of the services rendered. The primary insurer then reviews the claim and pays according to its plan benefits and coverage limits.

After the primary insurer processes the claim, they send an Explanation of Benefits (EOB) to the patient. This document details what was paid, what was denied, and any remaining patient responsibility. If a balance remains after the primary insurer has paid, the claim, along with the primary insurer’s EOB, is then submitted to the secondary insurer. The secondary insurer reviews the claim and the primary EOB to determine its payment responsibility based on its own policy terms.

The patient plays an important role in this process by providing accurate insurance information to their healthcare providers. It is also beneficial for patients to understand their policies and, in some cases, complete coordination of benefits questionnaires from their insurers to ensure all coverage is properly noted. If issues arise or a bill is received before the COB process is complete, contacting both insurers and the provider for clarification is advisable to resolve discrepancies.