How Does Having 2 Health Insurances Work?

Having two health insurance plans is a common situation for many individuals and families. Understanding how these plans interact is important for managing healthcare costs and ensuring claims are processed correctly. This guide clarifies the principles behind managing multiple health insurance policies.

Coordination of Benefits Principles

When an individual has coverage under more than one health insurance plan, a process called Coordination of Benefits (COB) comes into play. COB is the method insurance companies use to determine which plan pays first and to prevent overpayment for medical services. Its primary purpose is to ensure that the total benefits paid by all plans do not exceed 100% of the allowed medical charges. COB rules establish a clear order for payment, designating one plan as “primary” and the other as “secondary.” The primary plan processes the claim first, paying its portion of the costs according to its policy terms. If a balance remains, the secondary plan then reviews the claim and may cover some or all of the remaining amount, up to its own coverage limits.

It is important to understand that having two plans does not mean you will receive double benefits or that all out-of-pocket expenses will be eliminated. Each plan applies its own deductibles, copayments, and coinsurance. The secondary plan will not pay for services that are not covered under its own policy, nor will it pay the deductible or copayment of the primary plan. Many states have adopted the National Association of Insurance Commissioners (NAIC) Coordination of Benefits Model Regulation to standardize these rules. This framework provides guidelines for how various types of plans should coordinate benefits. Without such coordination, individuals could profit from their medical care by receiving payments exceeding the actual cost of services.

Determining Primary and Secondary Coverage

Identifying which health insurance plan is primary and which is secondary depends on specific rules applied by insurers. Generally, the plan covering an individual as an employee or main policyholder is primary over a plan covering them as a dependent. This rule often applies when a person has their own employer-sponsored insurance and is also covered under a spouse’s plan.

For dependent children covered by both parents’ health plans, the “birthday rule” is used. This rule dictates that the plan of the parent whose birthday falls earlier in the calendar year (month and day only, not the year of birth) is considered primary. The plan of the parent with the later birthday then becomes secondary. There are exceptions to the birthday rule, such as in cases of divorce or separation. If a court order specifies which parent is responsible for the child’s healthcare expenses, that parent’s plan is primary. If one parent has current employment-based coverage and the other has COBRA, the active employment plan is primary.

When Medicare is involved, the determination of primary or secondary coverage can vary. For individuals aged 65 or older who are still working, their employer’s health plan is primary if the employer has 20 or more employees, with Medicare being secondary. If the employer has fewer than 20 employees, Medicare is primary.

Medicaid, a joint federal and state program for low-income individuals, is almost always the payer of last resort. This means that if an individual has Medicaid and another health insurance plan, the other plan will always be primary. Medicaid will only cover costs that remain after the primary insurer has paid its portion.

The Claims Process with Multiple Plans

Navigating the claims process with multiple health insurance plans involves a specific sequence. The first step involves submitting the medical claim directly to the primary insurance provider. The healthcare provider’s billing department handles this initial submission.

Once the primary insurer processes the claim, they issue an Explanation of Benefits (EOB). This document details what services were covered, how much the primary plan paid, and any remaining balance or patient responsibility. The EOB from the primary insurer is a document for the next step in the process.

After receiving the EOB from the primary plan, the remaining balance is then submitted to the secondary insurance provider, including a copy of the primary EOB. The secondary plan reviews the claim and the primary EOB, applying its own benefits, deductibles, and cost-sharing rules. They pay any eligible remaining costs up to their coverage limits. The healthcare provider then bills the patient for any balance that neither the primary nor secondary insurance plans covered.

Common Scenarios for Dual Coverage

Dual health insurance coverage arises in several common situations, including:

• A frequent scenario involves spousal coverage, where both partners have their own employer-sponsored health plans and are also enrolled as dependents on each other’s plans.
• For children, dual coverage often occurs when they are covered under both parents’ health insurance policies.
• Another common situation involves individuals who elect COBRA coverage from a previous employer while also obtaining a new health plan from a new employer.
• Many individuals who are eligible for Medicare also maintain private health insurance, such as through a former employer or a Medicare Supplement plan.
• Finally, some individuals qualify for both Medicaid and private insurance due to limited income and resources.