Having access to two health plans can be good when making health care claims. Having two health plans can increase how much coverage you get. You can save money on your health care costs through what's known as the "coordination of benefits" provision. Here's what you need to know about using two health care plans and how it works.

What Is Coordination of Benefits?

When a person is covered by two health plans, coordination of benefits is the process the insurance companies use to decide which plan will pay first and what the second plan will pay after the first plan has paid.

As an example, if your spouse or partner has a health care plan at work, and you have access to one through work as well, your children could have coverage through both plans. Once the main plan pays, rather than having to pay the rest, you could see the second plan paying some of what you would have had to pay if you didn't have it. You can use both plans to get the most out of your children's health care.1

How Having Two Health Plans Works

When an insured person has two health plans, one is the main plan, and the other is the second one. In the event of a claim, the primary health plan pays out first. The second one kicks in to pay some or all of the costs the first plan didn't pick up. Some of the health care costs to consider when deciding how to manage your health care plans are outlined below.

Deductible

Your deductible is the amount you need to pay out of pocket each year before your insurance covers any of your medical costs, including appointments and prescriptions. For example, your insurance plan might have a $2,000 annual deductible, which means you need to cover the first $2,000 in costs each year before your insurance covers any expenses.

Copay

A copay—short for copayment—is an amount you pay at the time of each doctor’s appointment. Typically it's a small fee, such as $15 or $25 for your primary doctor. However, the copay might be higher for a specialist or other service.

Coinsurance

Coinsurance is a set percentage of the cost of service that you must share in paying. For example, your insurance provider might pay 80% of the cost of a service, while you'd be responsible for 20%. Coinsurance costs can be expensive if you or a family member need extensive care, such as a hospital stay or surgery.

Should You Keep Two Health Care Plans? 

If you have access to two health care plans, you could end up paying less money out of your own pocket for expenses the first plan doesn't cover. For example, if your first plan has a deductible or copay, the second plan may pay for that.3

Does a person with two health care plans get double benefits? Not exactly. Having two health plans does help cover any health care costs better through the coordination of benefits provision.

If you are thinking you will save money on health insurance by only having one plan, think about how combining care works and what health care costs you have before signing a health insurance waiver and giving up a second plan. If your plan through your own job is free, and your partner can add you to their plan for a low cost, you should keep both plans.

Understanding Coordination of Benefits System

The health plan coordination of benefits system is used to ensure both health plans pay their fair share. When both health plans combine coverage in the right way, you can avoid a duplication of benefits while still getting the health care to which you're entitled.4

Health plans combine benefits by looking at which health plan is the patient's main plan and which one is the backup plan. There are guidelines set forth by the state and health plan providers that help the patient's health plans decide which health care plan is the main plan and which is the second plan.

Once you've named one plan as your first plan, that plan will pay what is required without looking at what the second plan covers. Once the main plan has paid the costs it has to pay, the second plan will be used.

Your second health plan, unlike your first plan, can look at what health care service was provided to you by the main plan. The health care costs that are still due will then be looked at for payment under the second health care plan.5

Medicare Combined With a Group Plan

If you’re 65 or older, have group health plan coverage based on your or your spouse's current employer, and it has 20 or more employees, the group plan will pay first. If they have less than 20 employees, Medicare will kick in first.6

Reasonable and Customary Costs

There are some rules that health plan providers follow that could cause a person covered by two plans to still have to pay for some health care costs. One such area is the "reasonable and customary" amount.

Most health plans will only cover costs that are reasonable and customary. In other words, the health plan provider will not pay for any services or supplies that are being billed at a cost that is more than what is the usual charge for the treatment in the area where the treatment takes place.7

You May Still Need To Pay Some Costs

Once your main plan pays the reasonable and customary amount on a health care service, there may still be a balance due. This could happen if the health care provider was charging more than what the main plan felt was reasonable and customary.

The second plan does not have to pay the amount the first plan did not pay if the charge is deemed out of the normal limit. The insured person could still end up paying out-of-pocket. This could still happen even if there are two health plans.

What's more, neither health care plan will cover the cost of a service that is not covered under their health care plans. If both plans do not cover a certain test, for example, the second one doesn't have to pay after the first one denies the expense.8

People with more than one health care plan should discuss with their health plan providers how combining plans will work with their plans. This way, they can see what health care coverage they can expect.

Frequently Asked Questions (FAQs)