Coordination of Benefits: What It Is & How It Works

coordination of benefits

Paying for medical treatment can seem like a complicated process. Depending on your family or work situation, you may have multiple insurance plans. As a result, it could seem confusing as to who will pay for the service.

While denials in medical billing pose payment challenges, insurance companies offer other strategies to reduce patients’ costs. One such practice is the coordination of benefits. Below, the team at PracticeForces shares how COB works to help patients with multiple insurance plans pay the lowest out-of-pocket cost for treatment.

What Does Coordinating Medical Benefits Mean?

In its most basic form, coordination of benefits occurs when a patient’s insurance plans collaborate to pay for up to 100% of treatment costs. Depending on your policies, coordinating benefits can significantly reduce medical costs. Because every health insurance plan is different, though, understanding the different rules of this practice can explain why you might still have some expenses when you visit the doctor.

A General Framework of Coordinating Benefits

With the coordination of these benefits, your primary health insurance pays for medical expenses first. In the event of excess costs after your primary insurance pays, your secondary insurance will cover up to 100% of the remaining costs. Paying in this fashion allows benefits from both plans but also avoids duplicate payments.

Coordination of Benefits Rules by Category

Depending on the types of insurance you have to structure the coordination of benefits, COB rules will differ as follows:

  • Employer-sponsored healthcare plans: Do both spouses carry employer-sponsored healthcare? Your employer functions as the primary plan; your spouse’s plan is the secondary one.
  • Workers’ compensation: In workers’ compensation cases, the fund pays first. Your own health insurance plan will be the secondary consideration.
  • Medicare: Are you still working at age 66 under an employer-sponsored plan? Coverage differs based on company size. Small business plans will function secondary to Medicare, while large corporation plans take precedence.

What Will I Pay With COB?

Payment depends on the benefits of your two policies. For example, let’s say that you incur medical costs of $100, with your primary plan picking up coverage for $25. Then, your remaining $75 will defer to the secondary insurance plan.

And if secondary insurance can cover the difference, you won’t owe anything.

What Are Some Different Types of Coordinated Benefits?

There are a couple of different methods of coordinating your benefits, such as:

  • Carve-out. This method subtracts the amount your primary plan pays from what it could pay before deferring.
  • Non-duplication. Does your first plan pay more than what secondary coverage offers? The secondary plan won’t pay at all.
  • Traditional. Both plans can cover up to 100% of treatment.

Pay Medical Bills Efficiently With PracticeForces

If you would like to know more about everything from improving practice revenues to helping streamline medical payments, contact PracticeForces. We can help you navigate the complicated processes surrounding medical billing. Why not chat with our qualified, passionate team about ways to achieve better practice growth and organization?

For more information about the coordination of benefits or medical billing, call PracticeForces at (727) 771-1300 (patients) or (727) 202-5429 (care providers) today!

Parul Garg, CEO and co-founder of PracticeForces, has significantly contributed to the growth of over 1,000 U.S. medical practices through her expertise in medical billing and coding since the company’s inception in 2003. With a background in Computer Science and an MBA in Human Resources, her leadership and AAPC-certified coding skills have been pivotal in managing the company’s operations effectively.

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