Understanding Primary & Secondary Health Insurance: Coordination of Benefits

When someone has health insurance coverage under two different policies, one is the primary insurance policy and the other is secondary. Both insurers follow rules for coordination of benefits to determine who the primary insurer is. The primary insurer is responsible for paying claims first. The coordination of benefits are not laws, rather they are established industry rules. Only when coordination private insurance with government-sponsored Medicare and Medicaid do laws apply.

Active/Inactive Rule

Any insurance plan you have through your employer, where you are the active employee, is your primary health insurance plan. Any group insurance coverage you have as an inactive employee, such as through layoff continuation or as a retiree, is secondary, if you also have group health insurance as an active employee. Only if the plan is through COBRA continuation of benefits will other group health insurance remain secondary.

Birthday Rule

The birthday rule applies to children covered under both of their parent's health insurance plans. An industry standard, almost all health insurers follow the birthday rule to determine which insurance is primary. The rule says that the parent with the earliest birthday month and day provides the primary insurance coverage. The year is excluded from this rule. When the parents have the same birthday, the parents with the insurance the longest provides the primary insurance.

Dependent/Non-Dependent Rule

The non-dependent/dependent rule is another rule to help insurers determine which insurance is primary and secondary. Any insurance where you are the primary subscriber, and not a dependent, is your primary insurance plan. If you are covered as a dependent under your spouse's plan, his plan is your secondary insurance plan. Plans were you are a dependent will always be secondary to any plan you carry in your name as the primary subscriber or member.

Medicare Rules

When covered under a group health insurance plan, per Medicare Secondary Payer laws, the group plan is always the primary health insurance. Medicare Secondary Payer laws supersede any insurance rules or state laws concerning coordination of benefits. If Medicare is your primary insurance, any other private supplemental health insurance coverage you purchase would be considered the secondary insurance plan. As a Medicare beneficiary, you must tell your doctors and secondary insurers that you have Medicare coverage.