What Is Primary Health Insurance & How Does It Work?
Navigate health insurance when you have multiple policies. Discover what primary coverage means and how benefits are coordinated for your claims.
When individuals are covered by more than one health insurance plan, understanding how these plans interact ensures proper coverage for medical services. When multiple policies are in place, one plan is designated as primary, and the others become secondary or tertiary, determining the order in which benefits are paid.
Understanding Primary Coverage
Primary health insurance refers to the main policy that provides the initial coverage for medical expenses. This plan is always billed first when an individual receives healthcare services. It covers a significant portion of healthcare costs, including doctor’s visits, hospital stays, prescription medications, and preventive care, according to its terms.
The designation of primary insurance is important for both insured individuals and healthcare providers. Knowing which plan is primary helps individuals manage out-of-pocket expenses and ensures claims are processed efficiently. Healthcare providers rely on this information to bill the correct insurer first, preventing delays and billing errors. The primary policy sets the foundation for how all subsequent insurance plans contribute to the cost of care.
Rules for Determining Primary Insurance
When an individual has more than one health insurance plan, Coordination of Benefits (COB) determines which plan pays first. COB rules prevent duplicate payments for the same medical expenses and ensure that the total amount paid by all insurers does not exceed the total cost of the services. These rules are established by insurance companies and sometimes by state or federal regulations.
A common scenario involves coverage through employment. The health plan provided through an individual’s own employer is considered primary. If that individual is also covered under a spouse’s or parent’s plan, the spouse’s or parent’s plan is secondary. This hierarchy ensures that the direct employment-based coverage takes precedence.
For children covered by both parents’ health plans, the “Birthday Rule” applies to determine primary coverage. Under this rule, the plan of the parent whose birthday falls earlier in the calendar year (month and day, not year) is primary. Exceptions exist, such as court orders dictating primary coverage, or if one parent has group insurance and the other has individual insurance, the group plan is primary.
Medicare has specific rules when coordinating with other health plans. If an individual aged 65 or older is still working and covered by an employer’s health plan, the employer’s plan is primary if the employer has 20 or more employees. Medicare is secondary. If the employer has fewer than 20 employees, Medicare is the primary payer, with the employer plan acting as secondary.
When an individual has both Medicaid and private health insurance, Medicaid acts as the secondary payer. TRICARE or COBRA coverage serves as secondary if other employer-sponsored coverage exists.
Claim Processing with Multiple Plans
When medical services are received, the healthcare provider first submits the claim to the primary insurance company. The primary insurer processes the claim according to its policy terms, applying deductibles, copayments, and coinsurance. This initial payment or denial is determined based on the primary plan’s coverage limits and rules.
After the primary insurer has paid its portion or denied coverage, any remaining balance is submitted to the secondary insurance plan. The secondary insurer reviews the claim, considering what the primary plan has already paid. It covers some or all of the remaining costs, subject to its own policy terms, deductibles, and copayments. The secondary plan fills gaps left by the primary coverage, reducing the patient’s out-of-pocket expenses.
Patients receive an Explanation of Benefits (EOB) from both the primary and secondary insurers. These documents detail the services received, the amount billed, how much each insurer paid, and any remaining balance the patient may owe. Reviewing both EOBs helps individuals understand how their benefits were coordinated and the final financial responsibility for their medical care.