Coordination of Benefits

What is Coordination of Benefits?

Definition
Coordination of Benefits (COB) is the process of determining which of two or more insurance policies will have the primary responsibility of processing/paying a claim and the extent to which the other policies will contribute. COB is intended to prevent the duplication of benefits when a member is covered by more than one insurance carrier, including other health insurance, retiree benefits, auto insurance, workers compensation, etc.

Order of Benefit Determination
It is necessary to determine which policy has the primary responsibility to pay claims before other coverage is considered for benefit determination. The primary plan must provide its benefits as if the secondary or tertiary plans did not exist. A plan that does not include a COB provision may not take the benefits of another plan into account when determining benefits. The secondary plan may take the benefits of another plan into account only when the correct determination is made that the plan is in fact secondary. Since the order of benefits may differ for individuals within a family, each member must be reviewed individually. If Medicare is one of the plans involved when trying to determine the order of benefits, provider offices should skip forward to the Medicare section. If Medicare is not involved, offices should use the following “order of benefits” rules.

Each plan determines its order of benefits using the first of the following rules that apply:

1. Plans Covering Individual other than Dependent
2. The benefits of the plan that covers the person as an employee, member, subscriber, or other than as a dependent are considered primary over those that cover the same person as a dependent.
3. Dependent Child Parents NOT Separated or Divorced
4. The rules for the order of benefits for a dependent child when the parents are not separated or divorced are as follows:
   a. The benefits of the plan of the parent whose birthday falls earlier in the calendar year are determined before those of the plan of the parent whose birthday falls later in the year; and
   b. If both parents have the same birthday, the benefits of the plan that covered the parent for the longer time period are determined before those of the other parent. Birthday refers only to month and day, not year in which parents were born.
5. Dependent Child (under 18) and Parents Separated or Divorced

Medicare

1. Individuals who are age 65 or older may be eligible for Medicare. Certain individuals who are disabled, in end stage renal dialysis (ESRD), or kidney transplant patients may also be eligible for Medicare, regardless of age.
2. Medicare coverage has two parts:
   a. Hospital Insurance (Part A) provides coverage of inpatient hospital services, skilled nursing facilities, home health care, and hospice care. Physician professional fees (e.g., anesthesiologist, radiologist, pathologist, etc.) are not covered under Medicare Part A, even when rendered in conjunction with a covered inpatient stay, etc.b. Medical Insurance (Part B) provides coverage for physician services (including services rendered during an inpatient stay or other stay that is covered under Medicare Part A), outpatient services, medical equipment and supplies, and other health services and supplies.

Declined Medicare Part A, B or both

1. Some Self-Funded Groups may apply sanctions if a member declines Medicare Part A, B or both when they become eligible for age related Medicare coverage. If a member aged 65 or older is on a retiree policy with Select Health either obtains only Medicare Part A, Part B, or neither, Select Health will reduce the benefits by the amount Medicare would have paid (e.g. 80% of the billed amount or Select Health eligible charges, whichever is less), where Medicare is prime for these groups.

Dependents

1. Where Medicare is prime for the subscriber, Select Health will continue to pay primary benefits on dependents (except spouse also eligible for Medicare) regardless of their eligibility for Medicare.

Medicare Special Circumstances

1. It is possible a member might elect Medicare Part B only. When this occurs, Medicare as a secondary payer (MSP), these guidelines do not apply. Medicare Part B is primary over an active policy.
2. Medicare coverage does not include prescription benefits; therefore, Select Health’s prescription benefit applies.
3. Medicare does not pay for services rendered at a veteran’s hospital (VA). The VA hospitals write off the amount Medicare would have paid and Select Health coordinates benefits as usual.