Help

 

Coordination of Benefits (COB) 

 

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

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.

2)  Dependent Child Parents NOT Separated or Divorced

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 detemined                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.

3)  Dependent Child (under 18) and Parents Separated or Divorced

A copy of the divorce decree is required before order of benefits can be determined. If the child is covered under policies of separated or divorced parents, the order of benefits are determined as follows:

If the specific terms of a court decree state that one of the parents is responsible for the child’s health care expenses or health insurance coverage, and the plan of that parent has actual knowledge of those terms, then that plan is primary. If the parent with responsibility for health insurance has no coverage for the child’s health care expenses, but that parent’s spouse does, then the spouse’s plan is primary.

If there is no court decree or it does not specify which parent is responsible for health care coverage

       a)  First, the birthday rule of the parents

       b)  Next, longer / shorter rule of the policy holders

With Healthcare reform Dependents under the age of 26 may continue on their parents’ policy regardless of residence, marital or financial status.  Order is determined as follows:

       a)  Subscriber over dependent

       b)  Birthday rule of parents

       c)  Longer shorter is applied when member is dependent on spouse and parents’ plan

Joint Custody

If the court decree declares the parents have joint custody without stating which parent is responsible for health care expenses, follow the birthday rule.

Never Married or No Court Decree

If the parents are not married or are separated/divorced without a court decree allocating responsibility for the child’s health care expenses, the order of benefits is as follows (as far as it applies):

       a)  The plan of the custodial parent;

       b)  The plan of the spouse of the custodial parent;

       c)  The plan of the non-custodial parent; and

       d)  The plan of the spouse of the non-custodial parent.

4)  Active or Inactive Employee

The benefits of a plan which covers a person as an employee who is active (neither laid off nor retired), or as that employee’s dependent, are determined first, before those of a plan which covers that same person as an inactive (laid off or retired) employee, or as that employee’s dependent.

5)  Longer/Shorter Length of Coverage

If none of the above rules are applicable, then the benefits of the plan that covered an employee or member, longer are determined before those of the plan that covered the person for the shorter term.

The employee or member’s length of time covered under a plan is measured from their first date of coverage under that plan. If that date is not available, the date they first became a member of the group will be used as the date to determine the length of time. Two plans will be treated as one if the person was eligible under the second policy within 24 hours of the termination of the first policy. The start of a new plan does not include:

       a)  A change in the amount or scope of a plan’s benefits;

       b)  A change in the entity which pays, provides, or administers the plans’ benefits; or

       c)  A change from one type of plan to another, such as a change from Small Employer to a Large Group plan              or from a single employer plan to a multiple employer plan.

Consolidated Omnibus Budget Reconciliation Act (COBRA) Policy

COBRA, mini-COBRA, or Continuation of Coverage (Conversion) plans are secondary to a plan covering the same person as an employee, member, subscriber, and retiree or covering the dependent of an employee, member, subscriber, or retiree. In other situations, follow normal determination of benefits rules.

If the preceding rules cannot be used to determine the order of benefits, use the Longer/Shorter Rule.

Always-Secondary Plans

Due to the government’s role in subsidizing care for members enrolled in CHAMPUS/TRICARE and MEDICAID, these policies will always be considered secondary to another plan.

Note: TRICARE dental uses standard coordination guidelines 

For members on Idaho or Wyoming contracts, an individual plan is always secondary to a group plan when coordinating benefits.

Non-Complying Plans

A non-complying plan is one that does not use the order of benefits determination as outlined above. The rule of the non-complying plan will determine the order of benefits. SelectHealth is a complying plan and will coordinate benefits with non-complying plans according to the following:

       a)  If SelectHealth is secondary to a non-complying plan, SelectHealth may provide benefits before the                        non-complying plan, but the amount of benefits payable will not exceed the amount SelectHealth would                 normally pay as the secondary payer. This requires SelectHealth to request information from the                             non-complying plan informing us of the benefits applied toward the claim.

       b)  If the non-complying plan does not provide this information within a reasonable amount of time, the                    complying plan (SelectHealth) may process the claim as if the benefits of the non-complying plan were                    identical to SelectHealth’s. Once the actual benefits information is received, SelectHealth may adjust the              amount paid based on the previous assumption.

       c)  At no time should the complying plan (SelectHealth) pay more than SelectHealth would have paid had                   SelectHealth been considered the primary plan.

Medicare

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.

Medicare coverage has two parts:

1)  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.

2)  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

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 age 65 or older is on a retiree policy with SelectHealth either obtains only Medicare Part A, Part B, or neither, SelectHealth will reduce the benefits by the amount Medicare would have paid (e.g. 80% of the billed amount or SelectHealth eligible charges, whichever is less), where Medicare is prime for these groups. 

Dependents

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

Medicare Special Circumstances

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.

Medicare coverage does not include prescription benefits; therefore SelectHealth’s prescription benefit applies.

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 SelectHealth coordinates benefits as usual.

Dual Entitlement

When a member is entitled to Medicare coverage for age or disability, and then becomes entitled to Medicare coverage for ESRD, his/her Medicare eligibility and order of benefits determination for all services are as follows:

1)  If a member is entitled to Medicare based on age or disability, has group health plan coverage with an                   employer due to his/her active employment, and then becomes entitled to Medicare based on ESRD, the               guidelines for the ESRD 30-month coordination period will apply.

2)  If a member is entitled to Medicare based on age or disability, has retiree coverage with a group health plan,         and then becomes entitled to Medicare based on ESRD, then Medicare remains primary. (Prior to Medicare         ESRD entitlement, Medicare was primary due to Medicare Secondary Payer rules: becoming entitled to                  Medicare based on ESRD would not change the order of benefits.)

** The 30-month coordination period only applies if Medicare was not the primary payer for the individual on the    basis of age or disability at the time that the individual becomes entitled to Medicare on the basis of ESRD

Determining Order of Benefits with Medicare Age 65+

If the subscriber is over the age of 65, they are eligible for Medicare. Use the following guidelines to determine which policy is primary:

Employer Groups with more than 20 employees

Active policy (subscriber or dependent) is primary

     -  Medicare policy is secondary

     -  Inactive policy is tertiary

Employer Groups with less than 20 employees:

Medicare policy is primary

     -  Active policy (subscriber or dependent) is secondary

     -  Inactive policy is tertiary

Individual Policy:

Medicare is primary

Disabled and Under 65, Determining Order of Benefits

Certain members who are disabled, and under the age of 65 may be eligible for Medicare. Use the following guidelines to determine which policy is primary:

Employer groups with more than 100 employees:

     -  Active policy (subscriber or dependent) is primary

     -  Medicare policy is secondary 

     -  Inactive policy is tertiary

Employer groups with fewer than 100 employees:

     -  Medicare policy is primary

     -  Active policy (subscriber or dependent) is secondary

     -  Inactive policy is tertiary

Individual policy:

     -  Medicare is primary

Note: Number of employees refers to the total number of employees (full-time, part-time, or seasonal), not the number of employees eligible for benefits.

End-Stage Renal Disease (ESRD), Determining Order of Benefits

Individuals who are receiving dialysis or renal transplantation for end-stage renal disease become eligible for Medicare protection starting the third month after the month the course of maintenance dialysis treatments began. This three month qualification for Medicare period is known as the "waiting period."

For example, if a member began a regular course of dialysis in July, they are eligible to select Medicare coverage beginning October 1. There are circumstances when Medicare protection can begin earlier, such as on the first month of dialysis, if:

     -  The member participates in a self-dialysis training program in a Medicare approved training facility. The           training must start before the third month after dialysis begins; and the member expects to complete the               training and self-dialyze thereafter.

     -  Coverage can begin the month the member is admitted to an approved hospital for kidney transplantation or         procedures preliminary to a transplant. The kidney transplant must take place within the two months                     following admission.

Determining Order of ESRD Benefits

If the member becomes eligible for Medicare when the three month ESRD waiting period has been satisfied, Medicare will be the secondary payer during a period of 30 months, known as the "coordination period." The 30-month period during which Medicare may be secondary begins the first month the member is eligible for Medicare, whether or not the member enrolled. At the end of the 30-month coordination period, Medicare becomes the primary payer.

If the member has more than one period of Medicare eligibility due to renal failure, there is a separate coordination period for each occurrence. The waiting period does not need to be satisfied again. To illustrate, if a member received a kidney transplant that was successful for four years, then the kidney fails again necessitating dialysis or another transplant, Medicare coverage will be reinstated immediately without a waiting period.

When Medicare Protection Ends

If the member is eligible for Medicare only because of permanent kidney failure, Medicare coverage will end 12 months after the month the member no longer requires dialysis or 36 months after the month of a kidney transplant.

Medicare Part B coverage can end at any time if the member fails to pay premiums or if the member decides to cancel.

If the member ends his/her Medicare coverage as a result of a return to good health, then has another episode of kidney failure, their Medicare eligibility is reinstated. If there is more than one period of Medicare eligibility due to renal failure, there is a separate coordination period for each occurrence. The waiting period does not need to be satisfied again. To illustrate, if a member received a kidney transplant that was successful for four years, then the kidney fails again necessitating dialysis or another transplant, Medicare coverage will be reinstated immediately without a waiting period.

Note: When a member is eligible for Medicare due to ESRD, Medicare will pay for all services normally reimbursed by Medicare, not just kidney related services.

Federal Employee Health Benefits (FEHB) Plans Coordination Rules

     -  Dual coverage is not allowed with FEHB plan

     -  Group plans are primary over individual plans

     -  Medicare is primary over FEHB annuitant (retiree) FEHB is primary over Medicare active employee or spouse's         plan who is an active employee

© 2020 SelectHealth, All rights reserved.