Is It Worth Having Two Health Insurances?

Individuals sometimes have more than one health insurance policy. Understanding how these plans interact is important for effective healthcare management.

Understanding Coordination of Benefits

When an individual has more than one health insurance policy, Coordination of Benefits (COB) dictates how these plans work together. COB ensures claims are processed efficiently, preventing overpayment or duplicate payments. Its objective is to determine the order each insurer pays, ensuring combined benefits do not exceed the total cost of treatment.

COB rules designate one plan as the “primary” insurer and the other as the “secondary” insurer. The primary plan processes claims and pays its portion first, according to its policy terms. After the primary insurer pays, the secondary insurer reviews the remaining balance and may cover additional eligible expenses, up to its own coverage limits.

Determining which plan is primary and which is secondary depends on various factors. Generally, if an individual is covered by their own employer’s plan and also as a dependent on another plan (such as a spouse’s), their own employer’s plan is primary. For children covered under both parents’ health plans, the “birthday rule” commonly applies. This rule designates the plan of the parent whose birthday falls earlier in the calendar year as primary, regardless of the year of birth.

Other situations also have specific COB rules. For instance, if a person has Medicare and employer-sponsored coverage, the primary payer depends on factors like employer size and employment status. When a court decree dictates responsibility for a child’s healthcare expenses in divorce or separation, that parent’s plan is primary. If one plan lacks a COB provision, it is generally considered primary.

Once the primary insurer processes a claim, an Explanation of Benefits (EOB) is issued, detailing what was covered and what remains unpaid. This EOB is then submitted to the secondary insurer along with the original claim. The secondary plan assesses the remaining balance and pays for services covered under its policy, potentially reducing the patient’s out-of-pocket costs. Combined payments from both insurers will not exceed 100% of the allowable expense.

Common Scenarios for Dual Coverage

Individuals often have more than one health insurance policy due to life circumstances or employment. A common scenario involves spousal coverage, where both partners have employer-sponsored health plans and enroll in each other’s policies. This results in each individual having their own plan as primary and their spouse’s plan as secondary.

Young adults may remain on a parent’s health insurance plan, as permitted by the Affordable Care Act (ACA) until age 26, while also obtaining their own employer-sponsored coverage. In such cases, the young adult’s employer plan typically serves as the primary insurer, and the parent’s plan acts as the secondary.

Overlapping coverage can occur during career transitions, such as when an individual enrolls in COBRA continuation coverage after leaving a job, and then secures new employer-sponsored health benefits. The new employer’s plan typically becomes primary, with COBRA coverage serving as secondary.

For older individuals, dual coverage often involves Medicare alongside other insurance. Medicare can be primary, with a supplemental, retiree, or employer-sponsored plan acting as secondary coverage. Conversely, if an individual over 65 is still actively working for a large employer, their employer’s plan might be primary, and Medicare could be secondary.

Specific types of coverage like worker’s compensation or auto insurance medical payments can overlap with a standard health plan following an injury. In these instances, worker’s compensation or auto insurance typically pays first for injury-related medical costs. Student health plans also often function as primary coverage, with a parent’s plan serving as secondary.

Financial Implications of Holding Multiple Policies

Holding multiple health insurance policies has distinct financial implications, especially regarding premiums. Maintaining two plans means paying premiums for both, which can significantly increase monthly healthcare expenditures. The decision to carry dual coverage involves weighing these additional premium costs against the potential for reduced out-of-pocket expenses.

When Coordination of Benefits rules are applied, the interplay between deductibles, copayments, and out-of-pocket maximums becomes important. The primary insurer processes claims first, and the patient is responsible for meeting that plan’s deductible and any applicable copayments or coinsurance. The secondary insurer then considers the remaining balance.

The secondary plan may cover a portion or all of the costs not paid by the primary insurer, including deductibles, copayments, and coinsurance. This can lead to lower overall out-of-pocket costs for the patient than if they only had a single policy. For example, if the primary plan has a high deductible, the secondary plan might contribute to meeting that deductible or cover services after it is met.

However, a secondary plan does not guarantee all remaining costs will be covered. Each plan has its own network, covered services, and limitations. If a service is not covered by the secondary plan, or if it is an out-of-network provider for the secondary plan, the patient may still be responsible for a portion of the bill. Combined payments from both plans will not exceed the total allowable cost for the service.

While reduced out-of-pocket expenses are an advantage, assess if savings on deductibles, copayments, and coinsurance outweigh the cumulative cost of additional premiums. For individuals with minimal healthcare needs, the added premium expense of a second policy might not justify the limited financial benefit. Conversely, for those with significant or ongoing medical conditions, cost-sharing reductions from a secondary plan could result in substantial savings.

Practical Considerations for Managing Dual Policies

Effectively managing dual health insurance policies requires attention to administrative details. A primary consideration involves accurately identifying and communicating which plan is primary and which is secondary to healthcare providers and billing departments. Misidentifying the primary payer can lead to claim denials and delays in payment, creating administrative burdens.

When submitting claims, the process typically begins by filing with the primary insurer. After the primary plan processes the claim and issues its Explanation of Benefits (EOB), this document, along with the original claim, is then submitted to the secondary insurer. Keep thorough records of all medical bills, EOBs from both insurers, and claim correspondence.

Navigating two different sets of policy rules, provider networks, and pre-authorization requirements can introduce complexities. Individuals with dual coverage should review the specifics of each plan, including their respective deductibles, copayments, and out-of-pocket maximums. Ensuring that healthcare providers are in-network for both plans can prevent unexpected costs.

Pre-authorization for certain procedures or medications may be required by one or both insurers. Obtaining these approvals in advance can prevent claim rejections. Transparent communication with both insurance companies about dual coverage is important for smoother claim processing and to avoid potential issues.