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Coordination Of Benefits : When You Are Covered Under Two Or More Health Plans

Two Examples Of How Coordination Of Benefits Works

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4/11

Let's take a look at two examples. In the first example, the charge is covered under both plans. In the second, the charge is covered under the first plan, but not the second plan.

Example #1: Charges covered under both plans.

  • Suppose you're covered under your employer's plan. In addition, you are also covered as a dependent under your spouse's plan. Your bill includes out-patient laboratory charges that total $2,500. The bills are submitted to both insurance companies.
    • As you will see below, your plan is the Primary Payer. It pays what it would normally pay, let's say 80% of the bill. So the Primary Payer (your plan) pays $2,000 ($2,500 x 80% = $2,000). If there weren't two policies, you would be expected to pay the remaining $500 the Primary Payer did not pay.
    • The Secondary Payer, your spouse's plan, would also cover 80% but it has a $500 deductible. In the absence of any other plan, your spouse's plan would have paid $1,600 ($2,500 - 500 x 80%). However, since there is a balance due of only $500 after the Primary Payer makes its payment, that is all that the Secondary Payer has to pay. The benefit to you is that you don't have to pay anything. Between the two plans, the entire bill is covered.

Example #2: Charges covered under one plan, but not the other.

  • Suppose Jacques goes to a naturopathic doctor who charges $200. Naturopathic doctors are covered by the primary payer, but only to the extent of 60% of the bill. In this case, the primary plan pays $120 ($200 x 60%), leaving $80 unpaid. The secondary payer doesn't cover naturopathic doctors at all. Since the only charge was for the doctor, the secondary payer pays nothing. There was no pot of savings for the secondary payer, and Jacques must pay the remaining $80.
  • Alternatively, if the naturopathic doctor was part of a medical doctor's practice, part of the bill was from an M.D. who billed $100 for lab tests, and lab tests were covered 100% under both plans, the result would be as follows:
    • The primary payer would pay $120 for the naturopath and $100 for the lab tests since that is what the payer would have had to pay whether there was a secondary payer or not.
    • The secondary payer would then calculate what it would have had to pay if the primary payer weren't involved. In this case, that would have been $100 for the lab test, and nothing for the naturopath -- for a total of $100. Since all that is left out of the total bill is $80, the secondary plan will pay $80 even though it could be argued that the money was really paying for a naturopath who is not covered under the plan.


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