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Coordination of Medicare And Other Health Benefits

How Coordination Of Benefits Works

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As a practical matter:

  • When a bill is submitted, the company that receives the bill checks to see if there is other health coverage. If there is, the company applies the "coordination of benefits" rules to determine whether it is the "primary" or "secondary" carrier.
  • The "primary" company will then pay the full amount it would have paid if it were the only plan you have.
  • Then the "primary" carrier sends you an "Explanation of Benefits" describing what it paid and why.
  • If the amount the "primary" carrier paid did not include the entire bill, including co-pays and deductibles, the insured then submits the bill to the "secondary" carrier.
  • The "secondary carrier" then pays the difference between the actual bill and the amount that the primary plan paid. The secondary carrier never pays pay more than it would have paid if it had been the only plan except in one instance. If the primary payer covers something that the secondary payer does not, the secondary payer will still cover part of the bill up to the maximum amount of savings realized by being the secondary payor.
  • Neither plan will pay a total of more than it would have paid if it were the only plan.
  • Neither plan will cover something that is not covered under either policy. For example, if neither plan covers telephone charges in the hospital, neither one will pay for such charges.
  • Between the two companies you will be reimbursed 100% of your covered medical bills IF:
    • The total of the payments the two plans would have paid if they had been the only payor exceeds the total of the bill and
    • Everything billed was covered by at least one carrier.

For Example: Let's say you have health insurance coverage under your employer's plan and you are also covered under Medicare.

You bills for out-patient laboratory charges that totals $2,500. The bills are submitted to Medicare and the insurance company. Let's assume that Medicare is the primary carrier, and that the Medicare Allowable Amount for this service is $1,500.

Medicare pays what it would normally pay: 80% of the Medicare Allowable Amount of $1,500 = $1,200.

The Secondary Payer, your group health plan, covers 80% of the full $2,500 but it has a $500 deductible. In the absence of any other plan, your group insurance plan would have paid $1,600 ($2,500 -- 500 x 80%= $1,600). However, since there is a balance due of only $1,300 after Medicare makes its payment as primary payor, that is all that the Secondary Payer has to pay.

The benefit to you is that you don't have to pay anything. Between the two plans, the entire bill was covered.

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