How Does Dual Insurance Work? Primary vs Secondary Plans

Dual insurance refers to having more than one health insurance policy. This arrangement is common and influences how medical expenses are covered. Understanding dual insurance is important for managing healthcare costs and ensuring claims are processed correctly, as it dictates which insurer pays first and how remaining balances are handled.

Situations Leading to Dual Coverage

Dual health insurance coverage can arise through several common pathways. One frequent occurrence is spousal coverage, where both partners are employed and each carries health insurance through their respective employers. Individuals may choose to be covered under their own employer’s plan while also being listed as a dependent on their spouse’s plan, creating two active policies.

Children are often covered under multiple plans, particularly when both parents have separate health insurance policies. A child might be listed as a dependent on both parents’ employer-sponsored plans, leading to dual coverage.

For individuals over 65, Medicare frequently interacts with private insurance. If someone continues working past 65, their employer-sponsored health plan might be primary, with Medicare acting as secondary coverage, especially for larger employers. Conversely, Medicare typically becomes primary for retirees, with any retiree health benefits or Medigap policies serving as secondary coverage.

Medicaid, a state and federal program providing healthcare to low-income individuals, can also operate alongside private insurance. When an individual qualifies for Medicaid and also has access to private health insurance, Medicaid generally acts as the payer of last resort. This means the private insurance policy will pay first, and then Medicaid may cover remaining eligible costs.

Temporary coverage options, such as COBRA, can lead to dual insurance if an individual secures new employment with benefits while still maintaining their COBRA plan. Similarly, college students often have dual coverage through their university’s student health plan and their parents’ existing health insurance policy.

Principles of Coordination of Benefits

Coordination of Benefits (COB) is a set of rules insurers use to determine which plan pays first when an individual has more than one health insurance policy. COB prevents overpayment by ensuring that the combined benefits from all plans do not exceed total medical expenses.

The insurer designated as the “primary” payer is responsible for paying claims first, up to the limits of its policy. After the primary insurer processes the claim, any remaining eligible balance is then submitted to the “secondary” insurer. The secondary insurer reviews the claim and may pay for services that the primary plan did not cover, up to the limits of its own policy. This process helps reduce the out-of-pocket costs for the insured individual.

One of the most common COB rules for 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 is typically considered the primary plan.

Medicare has specific COB rules that depend on the individual’s employment status and the size of the employer. 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. For employers with fewer than 20 employees, Medicare often becomes the primary payer.

When an individual has an employer-sponsored plan and also COBRA or retiree coverage, the current employer’s plan is almost always primary. These established rules guide the sequential payment process between multiple health insurance plans.

Submitting Claims with Multiple Policies

When an individual has dual insurance, the process of submitting a claim begins with the primary insurer. The healthcare provider’s office will typically submit the claim directly to the plan identified as primary, based on the coordination of benefits rules. It is important to provide both insurance cards to the provider at the time of service.

Once the primary insurer processes the claim, they will issue an Explanation of Benefits (EOB). This document details what the primary plan covered, what amount was applied to the deductible, copayments, or coinsurance, and any remaining balance. The EOB is not a bill, but rather a record of how the primary insurer handled the claim.

In many cases, the primary insurer will electronically forward the claim information and their EOB details directly to the secondary insurer. If this automatic forwarding does not occur, the insured individual may need to manually submit the primary EOB along with a claim form to their secondary plan. The secondary insurer then reviews the primary plan’s payment and determines its own responsibility.

The secondary insurer will then apply its own benefits, deductibles, copayments, and coinsurance to the remaining balance. They will pay for eligible services that the primary plan did not fully cover, up to the limits of their own policy.

After both the primary and secondary insurers have processed the claim, they will each send their respective EOBs. The final patient responsibility, which includes any remaining deductible, copay, or coinsurance amounts not covered by either plan, will then be billed by the healthcare provider.