Can You Use Secondary Insurance Instead of Primary?

Primary insurance is the health plan responsible for paying a medical claim first. Secondary insurance then provides additional coverage, helping to address costs not fully covered by the primary plan. Having both primary and secondary health insurance is a common arrangement for many individuals and families, often leading to greater financial security. The interaction between these plans is governed by a process known as coordination of benefits, ensuring claims are processed efficiently without overpayment.

The Mechanics of Primary and Secondary Coverage

Individuals cannot choose to use their secondary insurance instead of their primary coverage. The primary insurer always processes the claim first, paying up to its coverage limits.

Once the primary insurer has paid its portion, any remaining eligible balance on the medical bill is then submitted to the secondary insurer for review. The secondary insurer may then cover some or all of the remaining costs, such as deductibles, co-pays, or co-insurance that the primary plan did not fully address. If a claim is mistakenly submitted only to the secondary insurer first, it will likely be denied or returned, requiring resubmission to the primary plan.

Determining Which Plan is Primary

Determining which health insurance plan is primary and which is secondary relies on specific coordination of benefits (COB) rules. These rules prevent duplicate payments and ensure an orderly claims process.

One of the most common guidelines is the “Birthday Rule,” which applies to dependent children covered by both parents’ health insurance plans. Under this rule, the plan of the parent whose birthday month and day fall earlier in the calendar year is considered primary for the child, regardless of the birth year.

If both parents share the same birthday, the plan that has covered a parent for a longer duration typically becomes primary. In situations of divorce or separation, the birthday rule generally still applies unless a court order specifies otherwise for healthcare financial responsibility. For adults, if an individual has both employer-sponsored insurance and another plan, such as through a spouse, their own employer-sponsored plan is usually primary.

When Medicare is involved, its primary or secondary status depends on factors like employment status and employer size. If an individual aged 65 or older is still working and covered by an employer with 20 or more employees, the employer’s plan is typically primary, and Medicare is secondary. However, if the employer has fewer than 20 employees, Medicare usually acts as the primary payer. For individuals with Medicare due to disability, Medicare is secondary if the employer has 100 or more employees, but primary if the employer has fewer. COBRA coverage, which allows continuation of group health benefits after certain events, is generally secondary to any active employer-sponsored plan.

The Value of Coordinated Coverage

Having both primary and secondary insurance offers significant financial advantages, even though the payment order is not elective. Secondary insurance can substantially reduce out-of-pocket expenses that remain after the primary plan has paid its share. This includes costs like deductibles, co-payments, and co-insurance.

Secondary coverage also plays a role in filling potential gaps in coverage. It can cover services or treatments that the primary plan might not fully pay for, or those with specific limitations. For example, if a primary plan covers 80% of a procedure, a secondary plan might cover a portion of the remaining 20%, thereby minimizing the amount the policyholder owes.