Coordination of benefits refers to a practice in the group health industry to eliminate the duplication of benefits when you’re insured by one than one group health plan. It determines which health plan will pay first and in what order other coverage will pay for covered services. This helps avoid duplicate payments for the same services, while ensuring each plan pays its share.
One plan is deemed to be the “primary payer,” and any other plan is a secondary payer. The primary payer is billed first and pays its maximum benefit amount. Others follow, ensuring the total payout does exceed 100% of the total claim cost.
The source of your coverage helps determine what plan pays first. If you have both commercial insurance and a government plan, the commercial plan always pays first. Whether you are the primary insured or a dependent under the policy is also a factor in the decision. If you have an employer-sponsored plan and Medicare, and you are over 65, Medicare may be the secondary payer. In some situations, the “birthday rule” may be consideration for children insured by both parent’s insurance.
The rule says the parent whose birthday falls earlier in the calendar year is primary, regardless of age.