Can You Have Two Types of Health Insurance?

Having more than one health insurance policy, known as dual coverage, is possible. This arrangement is legal and can arise in various personal and professional circumstances. Many Americans are covered by multiple health insurance plans. Dual coverage does not mean receiving double payments; instead, plans work together through coordination of benefits to cover expenses. This process ensures total payments do not exceed 100% of the cost.

Scenarios for Multiple Health Coverage

Individuals often find themselves with more than one health insurance plan due to different life events or employment situations.

One common scenario involves spouses who both have employer-sponsored health plans. In such cases, one spouse might be covered by their own employer’s plan and also be a dependent on their partner’s plan. This arrangement can offer broader coverage for the family.

Another frequent situation occurs when individuals continue working past age 65 and are eligible for Medicare. They may have Medicare Part A and/or B alongside their employer-sponsored health plan.

Students under the age of 26 may have their own student health plan while remaining covered as a dependent on a parent’s health policy. Some individuals may also hold a short-term health insurance plan to bridge gaps in coverage, potentially with a major medical plan.

Temporary multiple coverage can also happen during job transitions. When an individual leaves a job, they might elect COBRA coverage to continue their previous employer’s health plan for a limited period, typically up to 18 months. If they start a new job that offers health benefits, they could temporarily have both COBRA and the new employer’s plan until the new coverage fully begins.

Medicaid, a government program providing health coverage to eligible low-income individuals, can also function as a secondary payer. If someone qualifies for Medicaid and has another private health plan, Medicaid generally supplements the existing coverage.

Understanding Coordination of Benefits

Coordination of Benefits (COB) is the process insurers use to determine which plan pays first when an individual has multiple policies. This prevents duplicate payments.

When multiple plans are involved, one is designated as the “primary” payer and the other as the “secondary” payer. The primary plan processes the claim first, paying its portion according to its policy rules.

After the primary insurer processes the claim and pays its share, the secondary plan considers any remaining balance. The secondary plan reviews the Explanation of Benefits (EOB) from the primary insurer and may cover remaining costs like deductibles, copayments, or coinsurance, based on its terms.

The claims process involves the healthcare provider submitting the bill to the primary insurer, which pays based on its policy. The patient then receives an EOB, which is forwarded to the secondary insurer for consideration of any remaining balance.

Several rules guide the determination of primary and secondary payers. For dependent children covered by both parents’ health plans, the “Birthday Rule” often applies. Under this rule, the health insurance plan of the parent whose birthday (month and day, not year) occurs earlier in the calendar year is typically considered primary. If both parents have the same birthday, the plan that has been in effect longer becomes primary.

For individuals covered by their own employer-sponsored plan and also as a dependent on a spouse’s plan, the individual’s own employer plan is generally primary. If an individual has active employment coverage and also COBRA or retiree benefits, the active employment plan is usually primary.

When Medicare is involved, it often acts as the primary payer, particularly if the individual is retired or the employer has fewer than 20 employees. However, if an individual over 65 is still working and covered by a large employer’s group health plan (typically 20 or more employees), the employer plan is generally primary, and Medicare is secondary.

Medicaid is almost always the “payer of last resort,” meaning it pays after any other available health insurance has paid its portion. This ensures that private or other government-sponsored plans fulfill their obligations first.

Financial Considerations

Having multiple health insurance plans can influence an individual’s financial outlay for healthcare.

One potential advantage is the reduction of out-of-pocket costs. When a secondary plan covers expenses such as deductibles, copayments, or coinsurance that the primary plan did not fully cover, it can significantly lower the amount an individual has to pay. This coordination can lead to more comprehensive coverage for medical services, potentially covering up to the allowed amount of the service.

However, the decision to maintain two health plans also involves the cost of premiums. Individuals with dual coverage will typically pay premiums for both plans, which can be a substantial financial commitment.

While a secondary plan can help with out-of-pocket expenses, the financial decision involves weighing potential savings on medical costs against the combined premium expenses.