What Is Coordination of Benefits?

Coordination of Benefits is a complex concept that requires an in-depth understanding of insurance. This article provides an all-encompassing guide to the topic, covering everything from an introduction of what coordination of benefits is and how it works, to the various types of coordination that exist, to the impact of coordination on medical coverage and insurance claims.

We’ll cover frequently asked questions regarding Coordination of Benefits, such as who is liable for payment, where you can find more information or resources, and what the risks are of applying coordination to your claim, as well as deeper discussions of newer concepts like multi-state plan coordination and disability benefits coordination.

This article will explain the Coordination of Benefits, arming you with the knowledge required to maximize your health plan’s benefits.


Key Takeaways

  • Coordination of Benefits (COB) is a process that determines the payment order between multiple health insurance plans to avoid overcharging or duplicate payments.
  • COB covers various services, including medical care, equipment, services, and prescription drugs, ensuring combined insurance plans do not exceed 100% of necessary covered medical expenses.
  • The order of benefit determination is a framework used to decide which health insurance plan pays first; the primary insurance plan pays first, followed by the secondary insurance plan if needed.
  • Medicare Crossovers and COBA help ensure payments are made correctly between Medicare and other health insurance providers in cases where a person has both Medicare and private health insurance.
  • Subrogation is a process where the primary insurer seeks reimbursement from the other health insurance provider for any services they’ve paid for, ensuring no one receives duplicate payments.
  • Failure to complete the COB process can result in the patient being responsible for all claims, making it crucial to work with both insurers to ensure proper coordination of benefits.
What is a Coordination of Benefits

What Is Coordination of Benefits?

Coordination of benefits – what is it? It’s a process used to determine which health insurance company pays first and which one pays second, like two boxers in the ring. The National Association of Insurance Commissioners is the referee that makes sure no double payments or reimbursements for more than necessary are made.

What services does this cover? Medical care, equipment, services, and prescription drugs – all of these fall under covered services. For example, Medicare Part A covers hospital visits while Part B oversees physician office visits. Payments from combined insurance plans should not exceed 100% of charges for necessary covered medical expenses and services.

In conclusion, coordination of benefits helps ensure you don’t get overcharged by your insurance companies and that everything runs smoothly when dealing with multiple policies. The NAIC Model Coordination of Benefits Guidelines provides a necessary framework to ensure this happens appropriately every time!

Why Is COB Important?

Having two health plans can be like having a safety net when you need healthcare. Coordination of benefits (COB) is the process that helps make sure you don’t have to pay more than necessary for health care. But what exactly is COB, and how does it work?

Coordination of benefits ensures insurance companies pay their fair share when both plans cover the same person. It looks at factors such as type of health plan, age, the order in which the plans were obtained, or the amount of coverage to decide which plan pays first and how much each will contribute. For instance, if a family has two health plans – one from an employer group health plans and another from the government – then typically, the employer’s plan will take precedence.

The rules used to determine who pays first are specific to each insurance company. They also consider things like type of service or drug, deductibles/coinsurance, whether either plan covers it, etc.

This process may seem complicated, but its purpose is simple. To give patients maximum benefit from their health insurance plans while keeping costs down for everyone involved. In other words, coordination of benefits helps ensure that people get quality coverage for their medical needs without breaking the bank!

Order of Benefit Determination

The order of benefit determination is a complex system that can be hard to wrap your head around. But understanding it is essential if you want to make sure you’re not overpaying for health care.

So, what exactly is the order of benefit determination? It’s a framework used to decide which health insurance plan pays first when multiple plans are in place. Usually, the primary insurance plan pays first, followed by the secondary insurance plan if necessary. The amount each insurer pays depends on state law, plan size, and type – all subject to state legislation.

For example, many states have laws that dictate an employee’s plan should pay first before their spouse or parent’s. In addition, a smaller plan may pay first if it offers more coverage than the larger one.

When it comes to who gets paid back what portion of healthcare costs, typically, the primary payer will be either an employer filing a claim or Medicare, while the secondary payor could be another person filing a claim with private insurance or an employer of their spouse/parent (with exceptions). If there’s still money left unpaid after both insurers have done their part, then up steps the secondary payor, who’ll cover up to 100% of any remaining balance due on bills!

But don’t worry too much about getting confused by the coordination of benefits rules – remember why they exist: so you don’t end up paying out-of-pocket for services unnecessarily!

Medicare Crossovers

The Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) Section 111 requires Group Health Plans (GHPs), liability insurance, such as self-insurance, no-fault insurance, and workers’ compensation to report. Blue Cross is responsible for notifying Medicare about its members who have elected Original Medicare as their primary plan and verifying the memberships of those individuals.

Coordination of Benefits Agreement (COBA) is a national program that facilitates the transmission of enrollee eligibility data and Medicare-paid claims data between BCRC and other health insurance organizations. COBA was established to coordinate benefits between Medicare and other health insurance involved – what does it do? It helps ensure that payments are made correctly!

Example #1

As an example of a coordination of benefits situation involving Medicare, consider a scenario in which an individual has both Medicare and a private health insurance plan. In this case, the primary payer would be the private health insurance plan and the secondary payer would be Medicare. The insurance companies would coordinate benefits to determine which plan pays first and how much each plan pays for health care costs.

The plan with the most comprehensive coverage will pay first, and the other plan will pay any remaining costs not covered by the primary plan. For example, if the covered services provided by the primary plan cost $1,000 and the plan only covers 80% of those costs, then the secondary plan would cover the remaining 20%, or $200.

In this situation, the primary payer would be responsible for paying the first $800, and the secondary payer would be accountable for the last $200.


Subrogation is getting another insurance company to pay for care that the primary health insurer already covers. In coordination of benefits, it’s a process where the primary insurer seeks reimbursement from the other health insurance provider for any services they’ve paid for. This is done so that no one gets double payment for the same service.

The primary insurer must submit all claims to the other health insurance company and if approved, will receive some of this reimbursement back – this is subrogation in action! Large employers often use voluntary data sharing agreements (VDSAs) to send their retiree prescription drug coverage population details to the other health insurance provider. This allows them to get reimbursed for any care they have already provided and receive a portion when the second insurer accepts their claim.

Subrogation plays an important role in coordinating benefits as it ensures no one receives duplicate payments – plus VDSAs help large employers maximize their reimbursements from secondary insurers, which helps reduce the overall cost of care for those insured!

When One Person Has Two Health Insurance Plans

Having two health insurance plans is becoming more and more common. Dual-income households, working Medicare beneficiaries, and extended dependent coverage for children up to age 26 contributed to this. As a result, it has had an impact.

While having two health plans may provide more coverage and better access to healthcare services, there are potential downsides, such as paying double premiums and dealing with deductibles for both plans.

Two health insurance plans are most common when both spouses have employer-sponsored health plans. In these scenarios, it’s important to determine which of the two plans will be the primary payor and which will be the secondary. The primary plan pays benefits first, and any remaining balance is paid by the secondary plan.

It’s also important to remember that each family member’s order of plans and benefits may differ. For example, if a couple has two plans and one partner is the policyholder for both, their partner’s insurance plan may be the primary payor for their child(ren)’s claims.

In divorce cases, the custodial parent’s health plan is usually the primary payor. The birthday rule applies if a child is covered under both parents’ plans. The parent whose birthday falls earlier in the calendar year is the primary payor.

When submitting a claim to the partner’s insurance plan, the amount of coverage offered will determine the reimbursement. Your partner can file a claim for the remaining balance to your insurance plan if their plan does not cover it. This way, they would be able to get the necessary medical assistance. However, they will not be reimbursed for the remaining balance as this depends on the coverage offered by the insurance plan.

Overall, coordination of benefits is a necessary process to understand when a person has two health insurance plans. Insurance companies coordinate benefits based on the benefits rules outlined in the contracts of the two insurance plans.

When both plans pay, the primary payor pays first, and the secondary payor pays the remaining balance. It is important to understand how insurance plans work and to consult the benefits statement from each insurance plan to ensure that all claims are submitted correctly.

What Happens If the Coordination of Benefits is Not Completed?

When it comes to the coordination of benefits process, it’s like a puzzle – if you don’t complete it, there can be serious consequences. If the COB isn’t finished, insurance companies won’t coordinate benefits and the patient is left holding the bag for all claims – no matter how many plans they have.

To figure out what amount is owed on a medical or prescription drug claim, take a look at the second payer’s explanation of benefits. This will show you things like how much needs to be paid, what was already paid by the primary payor and any amounts that were disallowed due to being previously covered.

If this issue isn’t resolved quickly, then it’ll be up to the patient to foot the bill for everything. Insurance companies won’t even consider paying until coordination of benefits has been completed properly – so that means shelling out cash from your own pocket!

It pays (literally!) to understand why completing this process correctly is so important: insurance companies coordinate benefits in order to make sure each plan covers its fair share without going over budget. So work with both insurers and get those pieces into place!

Frequently Asked Questions

What is the difference between COB vs EOB in healthcare?

As a medical billing professional, it is important to understand the distinction between COB and EOB in healthcare. Coordination of Benefits (COB) relates to insurance benefits assigned to individuals, dependents or children covered by both multiple policies.

Explanation of Benefits (EOB) outlines the details of those benefits. Understanding these terms can help to ensure accurate billing procedures.


In conclusion, Coordination of Benefits (COB) is a process used by insurance companies to determine the primary and secondary payor for a medical claim when two or more health plans are involved. It ensures that all parties involved in providing and paying for healthcare services have accurate and consistent information, helping individuals secure the best possible coverage.

Understanding coordination of benefits is important when managing multiple plans and can help prevent out-of-pocket costs. Providing complete information to each health plan is key in determining the order of benefit determination, with the primary insurer paying first followed by the secondary insurer paying the remaining costs not covered by the first plan.

Knowledge of the coordination of benefits rules, including the birthday rule, can help ensure individuals get the most out of their insurance coverage.