CO-ORDINATION OF BENEFITS (by Selina Thompson)

Co-ordination of Benefits takes place when an insured person is covered under more than one Group and/or Individual health plan and receives benefits from both (or all) plans up to the claim’s incurred amount.

Co-ordination of Benefits must not be confused with Co-insurance. Co-insurance is a co-sharing agreement between the insured and the insurer under a health insurance policy which provides that the insured will cover a set percentage of the covered costs after the deductible has been paid.

Often someone may be covered under more than one insurance plan. This is often the case where one is covered as an employee at the place of employment as well as being covered as a dependent under the spouse’s group health plan.

Insurers believe that it is improper for an insured to receive full benefits from each plan even though two premiums might have been paid. It is felt that an insured should not profit from thereimbursements he would receive from the insurers and the Co-ordination of Benefits provision is designed to prevent such a situation from occurring. There is still an incentive to have more than one plan since by working together the medical bills would be reimbursed at close to 100%

The insurance market is guided by certain factors in determining which plan is deemed to be the Primary one and that would pay first. Generally, the group health plan that covers the insured as an employee pays first.

Most insurance plans pay claims in a particular order, i.e. if the insured is female, claims for her male spouse and children are settled under the spouse’s plan first, while claims for herself are paid under the plan where she is the employee. This was established in the days when male spouses were the main breadwinners of the family, but things have changed considerably since then.

In cases where there are more than two plans, the order of settlement would be determined by whether a plan is compulsory, the length of time the plan is in force, and whether it is an individual plan or a Group plan

The plan which is determined as the Primary one will reimburse the insured for expenses incurred up to the maximum amounts it is liable for (the deductible, if applicable, will be subtracted). The other plan (the Secondary one) will pick up where the Primary one stopped, so that any amounts not reimbursed under the Primary plan will be paid (including the deductible subtracted under the Primary plan) up to the maximums payable under the Secondary plan. Therefore, the insured’s medical bills are fully reimbursed in most cases but he does not receive more than that expended. 

In all cases, there is a prescribed section on the original claim form submitted to indicate information about other coverages, which the insurer would then note in its system for ease of reference and processing. Only one (1) set of original claim documents must be submitted as to do otherwise could result in the insured being reimbursed more than they put out and maybe considered as fraudulent activity if determined to be purposely done.

It has been debated whether being covered under more than one health insurance plan is beneficial. However, due to escalating medical costs and changes in family structure–among other things–having additional insurance coverage is becoming more desirable. However, there has been a recent trend started by a particular insurer where simultaneous participation in one of their group plans and their Individual health portfolio, as well as both spouses being included as primary insureds in the same group plan are no longer allowed.

The value of two or three maximum coverages needs to be balanced against the total amount of premium payable, number and composition of family members (hereditary risk) and the potential benefits.