What Is Secondary Coverage and How Does It Work?

Health insurance provides financial protection by covering a portion of medical expenses, from routine check-ups to significant medical events. It involves a contract where an insurer pays healthcare costs in exchange for premiums. While many individuals rely on a single health insurance plan, some have more than one. In such cases, one plan is primary, and any additional plan is “secondary coverage.” This secondary plan helps cover costs the primary insurance does not fully address, potentially reducing out-of-pocket expenses.

Understanding Primary and Secondary Roles

When an individual has multiple health insurance plans, a specific order of payment determines which plan pays first. The “primary” insurance plan pays medical claims first, up to its coverage limits. Following this, the “secondary” insurance plan reviews the remaining balance and pays for eligible expenses according to its own benefits. This systematic approach prevents duplicate payments for the same services.

The process by which insurers determine the order of benefits is known as Coordination of Benefits (COB). COB rules ensure that when a person is covered by two or more health plans, the total benefits paid do not exceed 100% of the allowable expenses. Insurers use established guidelines to identify the primary payer.

Specific rules govern how primary and secondary roles are assigned. For instance, an individual’s own employer-sponsored plan is generally primary over a spouse’s plan if both cover the individual. If a child is covered under both parents’ plans, the “birthday rule” often applies; the plan of the parent whose birthday month and day occurs earlier in the calendar year is typically primary. If both parents share the same birthday, the plan that has provided coverage for the longest continuous period becomes primary.

Other COB rules include situations where a plan covering a person as an employee is primary over a plan covering them as a dependent. Similarly, if an individual has coverage through a current employer and also through a former employer (like COBRA), the active employer coverage is generally primary. These guidelines ensure a clear hierarchy for claims processing.

Common Situations for Secondary Coverage

Individuals often find themselves with secondary health insurance coverage due to various life circumstances, leading to multiple active plans. A common scenario involves married couples where both spouses have their own employer-sponsored health insurance plans and also choose to cover each other. In such cases, each individual’s own employer plan typically serves as their primary coverage, with their spouse’s plan acting as the secondary. This arrangement can offer broader access to providers or additional benefits.

Children are frequently covered under multiple plans, particularly when both parents have health insurance. Both parents may enroll their children in their respective plans, resulting in one parent’s plan being primary for the child and the other parent’s plan providing secondary coverage. This dual enrollment can help cover remaining costs like deductibles or copayments.

Medicare recipients may also have secondary coverage. For individuals who continue working past age 65, their employer-sponsored health plan often remains primary if the employer has 20 or more employees, with Medicare serving as the secondary payer. Conversely, if an individual is retired or the employer has fewer than 20 employees, Medicare typically becomes the primary insurer, and any retiree health benefits or Medigap policy would act as secondary coverage.

Students can also have secondary coverage if they are on a parent’s health plan and also enroll in a student health plan offered by their university. The student’s own plan, if purchased through their school, may sometimes be secondary to the parent’s plan, or vice-versa, depending on the specific plan terms and COB rules. Dual employment, where an individual holds two jobs each offering health insurance, can also lead to primary and secondary coverage, with the plan associated with the longer employment period often being designated as primary.

How Claims are Processed with Secondary Coverage

The process for submitting and processing claims with secondary coverage follows a specific sequence to ensure proper payment. When a healthcare service is rendered, the medical provider initially submits the claim directly to the patient’s primary insurance plan. This initial submission includes all necessary codes and details regarding the services received.

Upon receiving the claim, the primary insurance plan processes it according to its benefit structure, applying deductibles, copayments, and coinsurance as applicable. After processing, the primary insurer issues an Explanation of Benefits (EOB) to both the patient and the provider. This EOB details what the primary plan paid, what was applied to the deductible, and any remaining balance.

Subsequently, the provider, or sometimes the patient, submits the original claim along with the primary plan’s EOB to the secondary insurance plan. The secondary insurer then reviews the claim, taking into account the payments made by the primary plan. It applies its own benefits and Coordination of Benefits rules to determine what additional amount, if any, it will cover, potentially covering costs like deductibles, copayments, or coinsurance left over by the primary.

After both plans have processed the claim and made their respective payments, any remaining balance is the patient’s responsibility. Healthcare providers often assist patients in navigating this multi-step billing process.