Determining the Primary Group Payer

The Purpose of Coordination of Benefits

When an individual is covered by more than one group health insurance plan, coordination of benefits prevents duplicate reimbursement. The NAIC model regulation guides coordination of benefits rules for insured health plans in many states; self-funded employer plans generally follow their plan terms and applicable federal law rather than state insurance rules. Coordination of benefits generally limits combined payments from coordinating medical plans to 100 percent of allowable expenses; a fixed-benefit policy may pay separately. By eliminating duplicate claim payments, coordination of benefits rules help employers and insurers control premium costs.

An allowable expense is a health care expense, including applicable cost sharing, that at least one of the plans covering the person covers in full or in part. Coordination of benefits can apply to medical expense coverage under group or individual plans when the applicable rules and plan terms permit it; it does not ordinarily apply to individual disability income benefits. In contrast to coordinated medical expense plans, fixed-benefit coverage may pay regardless of other insurance. For an employer health plan subject to ERISA, the summary plan description must explain its coordination of benefits provisions.

Under these rules, the primary plan is the group health plan that pays benefits first, up to its policy limits, as if no other coverage exists. The primary insurer cannot reduce its benefits based on the existence of secondary coverage. The primary plan processes the claim first and provides an Explanation of Benefits detailing covered and uncovered amounts.

The secondary plan may pay some or all eligible expenses left unpaid by the primary plan, subject to its own terms and limits. When the secondary plan needs it, you can submit the primary plan's Explanation of Benefits with your claim, although some plans exchange this information electronically. The secondary payer uses the primary payer's Explanation of Benefits to calculate its remaining liability. A secondary payer may apply its own deductibles, copayments, and coinsurance when calculating its payment for the remaining balance. A secondary payer will never pay more than it would have paid if it had been the primary insurer, and it does not necessarily pay every charge the primary plan leaves unpaid.