Can You Have Two Health Insurances in California?

Health insurance provides financial protection by covering medical expenses like doctor visits, hospital stays, and prescription drugs. It helps individuals manage substantial healthcare costs. While many people hold a single policy, questions often arise about having more than one plan simultaneously. This can occur for various reasons, leading to a situation known as dual health coverage.

Understanding Dual Coverage in California

It is generally permissible to have multiple health insurance policies in California. This situation arises from common scenarios where individuals become eligible for more than one health plan. Having dual coverage does not mean receiving double benefits, but rather that the plans work together to cover healthcare costs.

Common scenarios for dual coverage include:
Spousal or family coverage, where both spouses have employer-sponsored plans that cover the family.
Individuals aged 65 or older with Medicare (Parts A and B) who also maintain supplemental plans, such as a Medigap policy, a Medicare Advantage (Part C) plan, or employer-sponsored retiree health coverage.
Those transitioning between jobs who elect COBRA (Consolidated Omnibus Budget Reconciliation Act) from a previous employer while simultaneously enrolling in a new employer’s health plan.
Students covered by a university health plan and a parent’s health insurance policy.
Individuals with a plan through Covered California who also have other specific or limited benefit plans.

How Multiple Policies Coordinate Benefits

When an individual has more than one health insurance plan, the process by which these plans determine who pays first and how remaining costs are covered is called Coordination of Benefits (COB). COB is an industry standard used by insurers to prevent overpayment and ensure that the combined payments from all plans do not exceed 100% of the allowed medical charges. This process designates one plan as the “primary” insurer and the others as “secondary” insurers. The primary plan pays first, covering medical bills up to its coverage limits, and then the secondary plan reviews the remaining balance.

Several rules guide which plan is primary. For dependent children covered by both parents’ plans, the “Birthday Rule” typically applies. This rule states that the plan of the parent whose birthday falls earlier in the calendar year (month and day, not year of birth) is usually primary. If both parents share the same birthday, the plan that has covered the child for the longest period generally becomes primary.

For adults, a plan from active employment is generally primary over other types of coverage. For instance, an individual’s own employer-sponsored plan is typically primary over coverage received as a dependent on a spouse’s plan. Similarly, active employment coverage is usually primary over COBRA continuation coverage or retiree health plans.

Medicare has specific COB rules. For individuals aged 65 or older who are still working, if their employer has 20 or more employees, the employer’s group health plan is usually primary, and Medicare is secondary. If the employer has fewer than 20 employees, Medicare typically becomes primary. Once an individual retires, Medicare generally becomes the primary payer, with any employer-sponsored retiree health plan acting as secondary. The secondary plan, after the primary plan has paid, may cover some or all of the remaining costs, such as deductibles, co-pays, or co-insurance, but only up to what it would have paid if it were primary.

Financial and Administrative Aspects

Maintaining two health insurance policies involves financial and administrative considerations. A primary aspect is paying two sets of premiums, a significant recurring expense. While dual coverage can reduce out-of-pocket costs, it also means managing two deductibles and separate out-of-pocket maximums. The primary plan’s deductible must be met first before its benefits apply, then the secondary plan assesses the remaining balance.

The secondary plan may contribute to the remaining balance or its own deductible, but the total amount paid by both plans will not exceed 100% of the allowed medical charges. While out-of-pocket expenses for medical services can be significantly reduced, especially for those with high medical needs, you typically do not get credit for meeting two out-of-pocket maximums simultaneously.

The claims submission process generally requires submitting claims to the primary insurer first. After the primary insurer processes the claim and issues an Explanation of Benefits (EOB), the EOB is typically submitted to the secondary insurer for review and payment determination. This sequential process can lead to increased paperwork and longer processing times. Understanding the rules of both plans and communicating with two different insurance companies can add an administrative burden. While dual coverage offers enhanced financial protection, individuals must carefully weigh the cost of two premiums against potential savings on deductibles, co-pays, and co-insurance to determine if it is financially advantageous.