Insurance Rules on Coordination of Benefits
Most insurance plans and claims payors coordinate benefits between two health plans when a patient has coverage by more than one insurance plan or carrier. Coordination of benefits is a standard practice and cost may be shared between both plans. Rules determining the order of payment and which insurer is billed first are set by the National Association of Insurance Commissioners (NAIC). These rules determine the patient's primary and secondary plans. The primary plan is billed and pays first and the secondary plan will likely cover the remainder of medical expenses.
Non-Dependent/Dependent Rule
The first rule in determining the order of applicable benefit plans is the non-dependent/dependent rule. This rule states that the individual is covered by his employer's health plan first. Any other plan, such as a spouse's, in which an individual is considered a dependent, would apply second.
Active/Inactive Rule
The active/inactive insurance rule may also be applicable. Health plan coverage you receive as an active employee will be considered your primary health insurance plan. If you receive health care coverage as a result of a layoff or retirement in additional to the coverage you receive as an active employee, the layoff or retiree coverage will be secondary to the active plan. For example, if you retired and receive retiree benefits but take another job with health care coverage, the retiree coverage will become secondary.
Birthday Rule
The birthday rule is followed when a child of married parents has health plan coverage from both parents' plans. The parent with the earlier month and day birthday (year excluded) is the parent who provides primary coverage to his child. If the parents have the same birthday, the parent who has had the plan longer becomes the parent providing primary coverage.
Separation/Divorce Rules
A legal separation or divorce adds another wrinkle into the coordination of benefits process. Unless specified in the divorce decree, typically the parent whom the court has established as more financially responsible provides primary coverage to the child. A remarried parent may provide the child's secondary coverage and his spouse's plan may provide a third level of coverage.
Medicare/Medicaid Rules
Non-NAIC rules apply to people with Medicare and Medicaid coverage. As a general rule, Medicare and Medicaid are secondary to any other coverage a person may have. Medicaid insurance rules are governed at the state level and Medicare rules are determined at the federal level. Any employer-sponsored coverage is considered primary to Medicare and Medicaid plans.
Tags: Medicare Medicaid, primary coverage, active employee, care coverage, coverage child, coverage receive
