There's nothing wrong with having two insurance policies. However, issues can arise when it is time to send in the claim. How do you know which is your primary?
Throughout this article, you will know why people can have two health insurance policies. You will also discover three methods to determine which policy becomes the primary and why. You will learn about the Birthday rule, Coordination of Benefits rule, and the unique peculiarities of each policy
There are three ways to determine your primary health insurance. The birthday rule determines primary by picking the policy of the parent with the earliest birthdate. The benefits coordination rule only applies if both policies have the provision. The last rule considers the characteristics of each policy (group/individual policy).
The information in this article has been collated using trustworthy sources to ensure that every statement you read is accurate at publishing. To that end, sources including Healthcare.gov, various health insurance companies, and health insurance industry experts were consulted.
What If You Have Two Health Insurance Policies
While having two health insurance policies to select from can provide a host of benefits, these benefits are not without their costs. When you visit the doctor, you will be required to put down your primary plan to claim whatever healthcare service you receive.
Having two health insurance policies means that only you are responsible, and you can determine which of your two plans is the primary plan. For individuals that have a work-sponsored health insurance policy, this is easy.
It does get a little complicated for dependents. To figure out which of the two plans you are dependent on is your primary policy, you need to analyze both of them, the policyholders, as well as the benefits and rules of both plans.
To help you determine this, there are three methods. They are:
Paying Attention To Individual Policies
While considering your health plans to know which should be the primary health insurance policy you use, here are some questions you should ask yourself.
Does My Group Policy Come With The Benefits Coordination Provision?
If you discover that one of your health insurance policies is a group policy that doesn't come with the provision, then that plan more often than not becomes your primary policy.
While such a health insurance policy is unusual, some union health insurance policies don't have the benefits coordination provision included yet. This method of determining your primary plan only applies when the general benefits coordination rules would.
For minors, the birthday rule would be used to ascertain your primary health insurance policy amongst all the available methods. (Don't get confused just yet. We'll get to the Birthday Rule in a Bit)
Which Of My Plans Is a Group Plan and Which Is An Individual Plan?
The coordination of benefits rule can only be applied to group policies. If one of your policies is an individual one, that will become your primary health insurance policy.
Group health insurance policies are defined as those offered to union members or employees by a union or an employer. Any other plan that doesn't meet this definition is recognized as an individual health insurance policy.
Is My Health Insurance Plan An HMO?
An HMO plan can alter this rule. For instance, HMO plans do not have the coordination of benefits rules. This is because HMOs have different rules that apply to them, and this has to do with the in-network and out of network definition that such plans have.
Your HMO is unlikely to cover your healthcare costs if you receive treatment outside its network of preferred medical providers. This means that if you require some form of healthcare service outside your HMO's network, you can send the claim to the other health insurance company.
Conversely, if your treatment happens to be within your HMO's preferred network, you can make your HMO the primary health insurance policy and send in your claim. This can help you save costs.
Generally, with an HMO plan, your copayment will be sufficiently low that you aren't concerned about secondary coverage.
Is My Health Insurance Plan A Government Plan?
You have to understand that different rules govern government health insurance policies. For instance, if you have a regular health insurance policy gotten from the Marketplace and are listed as a dependent on a Medicaid policy, the Medicaid plan would never be your primary policy.
This is because Medicaid, by design, is an insurer of last resort. It was made to provide health insurance coverage to those that otherwise wouldn't have any insurance.
Nevertheless, if you are listed as a dependent on Medicare, its status as your secondary or primary health insurance policy involves some calculations and permutations determined by your treatment, the condition you are being treated in, and the healthcare provider in question.
The good news is that Medicare has a booklet that thoroughly explains the rules in this scenario. You can head to Medicare.gov to gain a better understanding.
What is The Birthday Rule?
The birthday rule deals with children who are dependent on both of their parents' policies. It states that the parent's policy with the earlier birthday, both day and month is the primary plan.
You have to determine if the birthday rule applies to your situation.
This rule can help figure out which policy is the primary. However, it only applies to children. The birthday rule can also be used for minors. The birthday rule can also apply to those over 18, as long as they are in college or they are listed as dependent on someone else's health plan
When are your parents' birthdays?
Just as its name states, the birthday rule requires you to figure out your parent's birthday. As stated earlier, the policy of the parent with the earlier birthday is your primary health insurance plan.
Suppose your mother's birthday is December 2nd and your father's birthday is April 22nd. Using the birthday rule, you can determine that your father's health insurance policy is your primary health insurance plan. Simply because your father's birthday comes first.
If both your parents have the same birthday, then your primary plan would be the one that has the earliest effective date. The effective date means the date the plan was activated.
For instance, if both your parents were born on June 17th, but your father's health insurance policy has an effective date one year before your mother's policy. Your primary health insurance policy would be your father's plan.
What If Your Parents Are Legally Separated or Divorced?
If this happens to be the case, that your parents are legally separated or divorced, the birthday rule might not be a great way to determine what health insurance policy is your primary.
Generally, the health insurance policy of the parent legally responsible for you (this could be court-mandated) will be your primary health insurance policy.
If no such ruling regarding your healthcare has been made, then your primary health insurance policy is that of the parent that has custody of you.
The birthday rule can be applied if primary custody is yet to be determined due to ongoing divorce proceedings.
What is The Benefits Coordination Rule?
The benefits coordination rule makes it much easier to determine which health insurance policy becomes your primary health insurance plan. This rule only applies to you if the two policies have a coordination of benefits provision included in them.
Which Health Insurance Plans Have a Coordination of Benefits Provision?
Almost every health insurance provider that offers group health insurance has adopted a standardized provision that applies to all policies bought by unions or organizations for their members or employees.
Under such a provision, your primary health insurance policy pays the full benefits, while the secondary health insurance policy covers any expense left over. This could mean 100% of your medical expenses.
If the two policies come with a coordination of benefits provision, then you can select the policy you would like to become your primary health insurance policy.
Which Plan Covers A Current Employee?
If you are a dependent on two health insurance policies and one is gained from an active worker, then that policy becomes your primary health insurance policy. As a rule of thumb, a plan that provides coverage to an inactive worker would always be a secondary policy.
This scenario can happen when you have a plan that covers a retired worker and one that covers an active one.
What Plan Has Covered You For Longer?
If in both plans you are listed as dependent on coverage provided to active workers, then your primary health insurance policy would always be the one that provided coverage to you first. This is where the policy's effective date comes in.
This date is important as it was the first day you became covered under that health insurance plan. If the effective date of the plan was before you were added as a dependent, then your effective date would be the day you were added.
You will have to find the right dates for both health insurance policies and compare them. Your primary health insurance policy is the plan that afforded you coverage first.
Is Your Current Insurance Plan a COBRA Policy?
Continuation of Benefits enables employees to keep their health insurance policies for some time after their employment. Such plans will always be secondary to standard health insurance policies, irrespective of the factors involved.