What Is a Secondary Claim in Health Insurance?

A secondary claim in health insurance occurs when an individual has coverage from more than one health insurance plan. This means a primary plan pays for healthcare services first, and a secondary plan may cover remaining eligible costs. Secondary claims help manage healthcare expenses by coordinating benefits between multiple insurers, preventing duplicate payments, and reducing a patient’s out-of-pocket costs.

Understanding Coordination of Benefits

Coordination of Benefits (COB) refers to the rules determining the order in which multiple health insurance plans pay for medical services. When an individual has more than one health plan, COB rules establish which plan is primary and which is secondary. These rules are designed to prevent overpayment of claims, ensuring combined benefits do not exceed 100% of medical expenses.

A common COB rule for children covered by both parents’ health plans is the “Birthday Rule.” This rule dictates that the plan of the parent whose birthday falls earlier in the calendar year (month and day, not year) is primary for the child. For instance, if one parent’s birthday is in April and the other’s is in September, the April birthday parent’s plan would be primary. If both parents share the same birthday, the plan that has covered a parent longer typically assumes primary responsibility.

Employer group health plans generally take precedence over individual health insurance plans. If an individual has coverage through their own employer and an independently purchased individual plan, the employer-sponsored plan is typically primary. This hierarchy streamlines the claims process, as employer plans often involve shared premium costs and standardized benefits.

Coverage for active employees is usually primary compared to retiree or COBRA coverage. If a person is still working and covered by their employer’s plan, that plan will pay before any retiree benefits or COBRA continuation coverage. COBRA allows for temporary continuation of group health coverage after certain events, but it is often more expensive and generally secondary if other active coverage exists.

Medicare’s role as primary or secondary payer depends on specific circumstances, particularly employment status and employer size. For individuals aged 65 or older who are still working, their employer’s group health plan is usually primary if the employer has 20 or more employees, with Medicare acting as the secondary payer. If the employer has fewer than 20 employees, Medicare typically becomes the primary payer.

No-fault auto insurance and workers’ compensation policies are generally primary for accident-related injuries or work-related illnesses. If an injury occurs in a car accident or on the job, these specialized insurance types pay for medical expenses first. Health insurance then functions as a secondary payer for any remaining eligible costs.

How Secondary Claims Are Processed

The process for handling secondary claims begins after the primary insurance plan processes its portion of a medical bill. Healthcare providers first submit the claim to the primary insurance carrier. The primary insurer reviews services, applies benefits, and determines its payment responsibility.

Once the primary plan completes its review, it issues an Explanation of Benefits (EOB) document. This EOB details what the primary insurer paid, any adjustments, and the remaining balance eligible for secondary coverage. The EOB provides necessary information for the secondary insurer to understand prior payments and remaining charges.

Following the primary insurer’s payment and EOB receipt, the healthcare provider or, in some cases, the patient, submits the remaining balance and the primary EOB to the secondary insurance plan. This submission includes details of the services, diagnosis codes, and the primary plan’s payment or denial decision.

The secondary plan then reviews the claim and primary EOB, applying its own benefits, deductibles, and coinsurance terms. The secondary insurer pays any remaining eligible balance up to its coverage limits, often covering costs left after the primary insurer has paid, such as deductibles, copayments, or coinsurance.

Patients provide all their insurance information to the healthcare provider at the time of service. Understanding EOBs from both primary and secondary insurers is important to track payments and any remaining patient responsibility. If a provider does not automatically submit to the secondary insurer, patients may need to submit claims manually to their secondary plan.

Common Situations Involving Secondary Claims

Individuals often encounter secondary claims when covered by multiple employer health plans. For example, if both spouses have employer-sponsored health insurance and cover each other, one plan will be primary for each individual (typically their own employer’s plan), and the other will be secondary. This setup allows for additional coverage for expenses not fully paid by the primary plan.

Children covered by both parents’ health insurance plans frequently involve secondary claims due to the “Birthday Rule” discussed in Coordination of Benefits. The primary plan is determined by the parent whose birthday occurs earlier in the calendar year, with the other parent’s plan serving as secondary coverage, potentially covering costs such as deductibles, copayments, or services not fully covered by the primary plan.

Medicare beneficiaries often have secondary insurance, particularly if they are still working or have supplemental plans. As detailed in Coordination of Benefits, Medicare’s role as primary or secondary payer depends on employment status and employer size. For example, if an individual aged 65 or older is actively employed by a company with 20 or more employees, their employer’s group health plan typically functions as the primary payer, with Medicare being secondary. Conversely, if the employer has fewer than 20 employees, Medicare usually becomes the primary payer. Retiree health coverage from a former employer also often coordinates with Medicare, with Medicare usually primary.

Workers’ compensation or no-fault auto insurance plans typically act as the primary payer for injuries sustained in work-related incidents or car accidents. Health insurance then becomes the secondary payer for these specific types of claims, covering any remaining eligible expenses after the specialized coverage.