Coordination of Benefits COB and Health insurance

The definition of “coordination of benefits” refers to group plans only. Individual plans don’t usually include a COB clause, although every state has its own regulations governing COB with individual plans. In this case, a person with both a group plan and an individual plan who submits the same medical expenses to both plans may receive duplicate benefits. Although this prospect may sound like a good idea, remember that premiums for individual plans are very high, so you may not come out ahead financially.

Children’s health insurance Program (CHIP)

Parents whose income is too large to be eligible for Medicaid and yet too small to afford private health insurance can turn to their state’s Children’s health insurance Program (CHIP) to cover their uninsured children. (CHIP, or SCHIP State Children’s health insurance Program is also known as Title XXI, part of the federal Balanced Budget Act of 1997.) Every state and five U.S. territories have CHIP programs. Each runs its own federally funded CHIP program, so the programs vary. States must ensure that CHIP funds only cover children who are currently uninsured.

Find out how CHIP affects you. Call the toll-free number, 877-543-7669, to find your state’s toll-free CHIP phone number.

Keeping Good Records

With accurate, up-to-date records, filling out the claim form (a request to pay your medical expenses) should be simple and painless. Correct information on the claim form also lessens the chance that the insurance company rejects your claim or returns it for additional information. For each person in your family, keep a record in chronological order of each event related to a particular condition. The record should include enough information to make reconstructing the details of a condition easy for you. Include summaries and dates of pertinent telephone conversations and correspondence. Keep the form in a file folder and add the appropriate paperwork copies of bills, receipts, correspondence, prescriptions, and the like to the file.

You may also want to keep another set of records for each person in your family that covers health history, showing illnesses, injuries, medications, immunizations, and their corresponding dates. For a complete family history, record your parents’ and other relatives’ health information as well. Ask your provider for a copy of your file including results of lab work and tests which you can pick up in person or have sent to you at home. Occasionally, the lab or test results that you get by phone may differ from the written results. Add the information from the file to your family medical file. In addition to helping you file a complete and accurate claim, keeping good records serves other purposes. If you’re applying for a new health insurance plan, for instance, you may need records as proof of creditable coverage.

Managing Coordination of Benefits (COB)

Some people have health insurance coverage under more than one group plan. You may have coverage under a spouse’s plan, for example, as well as under your own plan. Group plans use coordination of benefits (COB) to eliminate any chance of duplicating benefits when you submit a claim to both insurance companies. In such cases, the combined benefits that the two plans pay add up to no more than the amount submitted for covered charges. The insurance industry has established standards for determining the order in which two or more insurers must pay for covered services. The insurer that must pay first is the primary or principal insurer; the second plan is the secondary or lesser insurer. The following rules determine which plan is primary and which plan is secondary:

- If one plan has COB and the other plan doesn’t have COB, the plan without COB is primary (pays first).

- If one plan is for an active employee and the other plan is for a retired person, the plan for the active employee is primary.

- If the patient is the policyholder in one plan and is insured as a dependent under the other plan, the patient’s own plan is primary (unless the patient is a retired person and the holder of the other plan is an active employee).

- If the patient has more than one plan in his or her name, the plan in which the patient has been enrolled the longest is primary.

- If a child is covered by both (not divorced) parents’ group plans, the plan of the parent with the birthday that falls on the earliest date of the year is primary (the birthday rule). If both parents’ birthdays fall on the same day, the plan that began first is primary. The birthday rule doesn’t take into account the actual year the parents were born, just the month.

- Unless a court order states otherwise, if a child of divorced parents is covered by both parents’ group plans, the plan of the custodial parent is primary. (When parents remarry, the plan of the custodial parent is primary; the plan of the custodial stepparent is secondary; and the plan of the noncustodial parent is third in line.)

The standards also regulate the amounts that each insurer must pay. The primary insurer pays as it normally would for covered charges. The primary insurer then submits a statement of the benefits it paid to the secondary insurer before the secondary insurer pays. The secondary insurer picks up the charges for the deductible and coinsurance or copayment. The secondary carrier also pays for benefits covered in the secondary plan but not covered by the primary plan. If you have more than one health insurance policy, be sure that you understand how the plans will coordinate your benefits. Carefully check each plan to understand how and when to submit insurance claims, as well as which plan to send them to first.