Can You Use Two Health Insurance Plans?

Health insurance serves as a financial safeguard, helping individuals manage the costs associated with medical care. It involves regular payments, known as premiums, to an insurer in exchange for coverage of various healthcare services, including doctor visits, hospital stays, and prescription medications. The core function of health insurance is to mitigate the financial burden of illness or injury, making necessary medical treatments more accessible.

The Possibility of Multiple Coverage

Individuals can have more than one health insurance plan simultaneously. This dual coverage is permissible and can offer additional financial protection against healthcare expenses. Various circumstances can lead to someone being covered by multiple plans.

One common scenario involves coverage through an employer and also as a dependent under a spouse’s employer-sponsored plan. Another instance is continuing COBRA coverage from a previous job while enrolling in a new plan through a new employer. Individuals eligible for Medicare or Medicaid may also maintain a private health insurance policy, leading to layered coverage.

Coordination of Benefits

When an individual holds more than one health insurance plan, Coordination of Benefits (COB) comes into play. COB is the system insurance companies use to determine which plan pays first for medical services. This process prevents individuals from receiving more than 100% of the actual cost of medical care by combining payouts from multiple policies.

The primary purpose of COB is to ensure benefits from all applicable plans are applied in an orderly manner, preventing overpayment and ensuring fair distribution of financial responsibility among insurers. It establishes a hierarchy for claims payment, dictating which insurer is responsible for the initial payment and which acts as the secondary payer. Without COB, a patient could potentially profit from their illness or injury, which is not the intent of health insurance.

Determining Primary and Secondary Insurer

Which health insurance plan is primary and which is secondary is determined by specific rules and guidelines. The primary insurer pays the first portion of a claim, while the secondary insurer considers the remaining balance. One widely applied guideline for children covered by both parents’ plans is the “birthday rule.” Under this rule, the plan of the parent whose birthday falls earlier in the calendar year is designated as the primary plan.

For adults, the determination often depends on the source of coverage. An employer-sponsored group health plan is generally primary over individual plans or plans obtained through health insurance marketplaces. If an individual is actively employed and also has COBRA continuation coverage, the active employment plan is usually primary. When Medicare is involved, its primary or secondary status depends on factors such as the individual’s age, disability status, and the size of their employer’s group health plan.

For example, if an individual is over 65 and working for a large employer (typically 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 often becomes the primary payer. Medicaid is almost always secondary to any other health insurance coverage the individual might possess, including private insurance or Medicare.

How Claims are Processed with Multiple Plans

When a patient has multiple health insurance plans, claims processing follows a specific sequence. Initially, the medical provider submits the claim to the primary insurance carrier. This primary insurer processes the claim according to its policy terms, applying deductibles, copayments, and coinsurance, and then pays its portion of the approved charges.

After the primary insurer has processed the claim and paid its share, any remaining balance is forwarded to the secondary insurance carrier. The secondary insurer reviews the claim, taking into account the payment made by the primary plan. This secondary plan may then cover services the primary insurer did not, or it might pay for a portion of the patient’s remaining out-of-pocket costs, such as deductibles or coinsurance, up to the limits of its own policy. The ultimate goal is to reduce the patient’s financial responsibility, though having two plans does not always eliminate all out-of-pocket expenses.