What is the Coordination of Benefits?

The health care system is riddled with complexities and nuances, particularly when it comes to employer-provided health insurance. One confusing aspect of employer health coverage is the coordination of benefits, or COB, when an employee has more than one insurance plans.

But what exactly is COB–and what should employees and employers know about this important distinction in healthcare? There are a few important aspects of benefits coordination to know.

What is the coordination of benefits for health insurance?

In the world of health insurance, coordination of benefits is a policy that applies to employees with more than one insurance plan. Employees in this situation might have specific preexisting conditions that require two plans, they could be partially covered by a family member’s insurance, or they are potentially on Medicaid and need multiple insurance plans to meet their needs.

One of the main benefits for employers and health providers is that a COB ensures the proper allocation of funds. In other words, the COB makes sure that your coverage is not overpaying on the total amount of the claim in question.

How to Coordinate Benefits

When an employee with existing health insurance enrolls in your health plan, a COB is crucial to ensure. This is because a COB is the main way to determine which insurance plan has primary payment responsibility—and how the other plans will integrate financially into the remaining payments.

It helps clarify to employers, employees, and insurance providers who will be responsible in the case that any medical need arises. Essentially, it reduces the administrative struggles and the potential for duplicate payments.

How do I ensure a non-duplication of benefits?

The COB helps ensure a non-duplication of benefits because it identifies which plan will be responsible for the payments first. The first plan responsible is the primary form of insurance and any additional plan becomes the secondary form. It’s best to determine this during the open enrollment period.

How do two different benefits plans work together? What are the limitations?

By coordinating the payment and benefits process, and defining the key financial provider of benefits in the insurance plan, COB ensures that plans work together in harmony rather than clashing.

It can also help an employee receive an additional payout if their plan doesn’t cover everything. Let’s say a person’s primary plan only foots 70% of a bill from a major surgery, for example. The secondary provider can supplement that remaining 30%. Having two plans also makes sense if the employee intends on meeting the deductible for both—which makes any additional monthly premium worthwhile.

However, it’s also important to understand that having two insurance plans isn’t always the best option. Many insurance plans offer the same basic benefits, meaning that a person could be paying two monthly premiums for the same services.

Can Medicare act as primary employee insurance?

Typically, Medicare isn’t the primary insurance that employees have. In general, group plans tend to be more robust and comprehensive. Medicare is usually only the primary plan if the employee plan is one designed for retirees (a situation that employers don’t often encounter).