In today’s diverse healthcare landscape, someone may opt for additional health insurance plans for various reasons, from access to a broader network of providers to help with reducing healthcare costs. However, navigating benefits across multiple insurance plans can be tricky. That’s where coordination of benefits (COB) comes in. COB rules determine how multiple health insurance plans work together to pay an insurance claim for one person.
Coordination of benefits is the process insurance companies use to determine how to cover your medical expenses when you’re covered by more than one health insurance plan. It clarifies who pays what by determining which plan is the primary payer and which is secondary. It also ensures proper claim processing and helps avoid overpayment or duplicate payments.
When a person has multiple insurance plans, COB rules determine the order in which the insurance plans will pay for covered services. The primary plan is responsible for processing the claim first and paying its share of the coverage amount. The secondary plan would then review the claim and pay the remaining balance within its coverage limits. For example, suppose you visit your doctor and get billed $250 for the appointment. Your primary health plan may cover the majority of the bill. Let’s say, for example, that’s $200. Then your secondary plan would pay the remaining $50. To prevent overpayment or duplication, plans will not pay more than 100% of the cost of the medical service(s), meaning that the combined benefits shouldn’t surpass the total cost of the treatment. You may also be responsible for deductibles, copayments, and coinsurance.
There are various scenarios in which someone might have two health insurance plans. Here are some everyday situations and how to determine which plan is most likely to be the primary or secondary payer.
| Scenario | Primary payer | Secondary payer |
| You’re covered under your own employer-sponsored insurance plan and covered as a dependent on your spouse or partner’s insurance plan | Your employer | Your partner’s plan |
| Your children are covered under your insurance plan and your spouse or partner’s insurance plan | Whichever parent has the earliest birthday in the calendar year | Parent with the later birthday |
| You’re divorced or separated and your children are covered under your insurance plan and your former spouse or partner’s insurance plan | Whichever parent has custody of the child; if custody is joint follow the birthday rule | The new legal spouse of the parent with custody or the parent without custody of the child |
| Your child is under age 26 and has their own policy and is also a dependent on your policy | Child’s plan | Parent’s plan |
| You’re covered by your employer's health plan and Medicare | Your employer if the company employs 20 or more people; Medicare if your employer has fewer than 20 employees 1 | Medicare if your employer employs 20 or more people; your employer if they have fewer than 20 employees 1 |
COB rules help organize and manage healthcare benefits and costs. Keep in mind that COB rules can vary depending on several factors, including the insurance company, the specific insurance plans involved, and the state you live in. Refer to the plan rules outlined in your policy and consult with your providers. In general, the following COB rules will typically apply.
The plan for which you are enrolled as an employee or main policyholder will be the primary payer. The plan for which you’re enrolled as a dependent, such as a spouse’s plan, would be the secondary payer.
This rule determines the order of coverage for children when both parents have health insurance. It places primary responsibility on the parent whose birthday falls earlier in the calendar year. The plan of the parent with the later birthday would have secondary responsibility.
If parents are divorced or separated, the primary payer for dependent children would be the parent with child custody. However, if parents share joint custody, the order of benefits will typically follow the birthday rule.
If you have continuation coverage — such as the Consolidated Omnibus Budget Reconciliation Act (COBRA) — and coverage from another plan, the benefits of the plan covering you as a member or employee are primary. Your continuation coverage would be secondary.
Let’s say you have coverage under a government program like Medicaid and Medicare in addition to other health or drug coverage. In that case, determining primary or secondary responsibility will depend on a number of factors. Factors can include your age, the size of the company you have employer coverage with, and other considerations. Check your insurance policy and coverage details or consult with your employer to determine what the order of coverage should be.
If none of the above provisions determines which plan is primary, then the plan you've been enrolled in the longest is typically considered the primary one.
Having multiple health insurance plans and coordinating benefits can be useful in the right situation, but in certain circumstances, the disadvantages of COB may outweigh the advantages.
Here are some reasons why having multiple insurance plans and using COB may not be a favorable choice:
Administrative complexity: Managing multiple plans and navigating COB can come with extra burdens, such as additional paperwork, coordination with multiple providers, and understanding the details of each plan’s rules and coverage.
Cost considerations: Maintaining more than one plan may not be a cost-effective choice if the combined premiums, deductible copayments, and coinsurance outweigh the benefits received. Before enrolling in multiple health plans, analyze the cost-benefits and carefully review your coverage details to avoid surprises. Consult with your insurance provider(s) to determine the best approach for your unique situation.