What is the coordination of benefits (COB)?
Coordination of benefits (COB) in healthcare is a system that determines how multiple insurance plans will share the responsibility for covering a patient's medical expenses.
When an individual is covered by more than one policy, COB establishes which plan is the primary payer and which is the secondary payer.
The primary plan pays first, and the secondary plan may cover any remaining eligible expenses. This process helps ensure that the total payment from all insurance plans does not exceed the cost of care, preventing overpayment and optimizing coverage for the patient.
How are primary and secondary insurance determined in COB?
In coordination of benefits (COB), primary and secondary insurance are determined based on specific rules and guidelines. These rules ensure that each insurance plan pays its share of the medical expenses according to its policy limits while the overall payment does not exceed the total cost of care. Here are the applicable rules:
- Birthday Rule: For dependent children covered under both parents' plans, the plan of the parent whose birthday falls earlier in the calendar year is considered the primary insurance. Other rules or agreements may apply if both parents have the same birthday.
- Employment Status: If an individual has coverage through both their employer and a spouse's employer, the insurance plan from their employer is generally primary. The spouse's plan is secondary.
- Medicare Rules: When Medicare is involved, it is typically the primary payer if the individual is over 65 or qualifies due to disability, while other insurance plans, such as employer-sponsored plans or private health plans, serve as secondary payers.
- Other Specific Rules: COB rules can vary based on specific policies and agreements between insurance providers, including situations involving auto insurance, worker's compensation, or accident coverage.
Examples of coordination of benefits (COB)
Example 1:
Tina, a child, is covered under both parents' health insurance plans. Parent A's plan is through their employer, and Parent B's plan is through a different employer.
According to the birthday rule, if Parent A's birthday is earlier in the year than Parent B's, Parent A's insurance will be the primary payer. The secondary insurance (Parent B's plan) will cover any remaining eligible expenses after Parent A's plan has been paid.
Example 2:
John, aged 68, has Medicare coverage and health insurance through his current employer.
Due to age, Medicare is typically the primary payer for medical expenses. The employer's insurance acts as the secondary payer, covering additional costs not covered by Medicare.