Coordination of Benefits takes place when a patient is entitled to benefits from more than one dental plan. Plans will coordinate the benefits to eliminate over-insurance or duplication of benefits.
General Coordination of Benefits Rules:
It is important to note that only group (employer) plans are required to coordinate. So, if one of the policies covering your patient is an individual policy, then it does not coordinate.
Employee/Main Policyholder
When both plans have COB provisions, the plan in which the patient is enrolled as an employee or as the main policyholder is primary. The plan in which the patient is enrolled as a dependent would be secondary.
Current Employment
When an employed patient has coverage through an employer that plan is primary over a COBRA or a retiree plan.
More than One Employer Plan
When a patient has plans provided by more than one employer, the plan that has covered the patient the longest is primary. A change in the dental plan carrier does not change the length of coverage time for the patient.
Dependent Children
The typical rules for dependents of parents with overlapping coverage rely on the birthday rule, that is, the parent with the earliest birthday in a calendar year is primary. In the case of divorced/ separated parents, the court’s decree would take precedence.
Medical/Dental Plan
When a patient has coverage under both a medical and dental plan, the medical plan is primary’s
Medicaid, Medicare and Coordination of Benefits
By law, all other available third-party resources must meet their legal obligation to pay claims before the Medicaid program pays for the care of an individual eligible for Medicaid. Thus, Medicaid is typically secondary to any other benefit plan.
In cases that involve a patient presenting with a retiree plan, Medicare and the patient has coverage on a spouse’s plan, generally any dependent coverage pays first, Medicare pays second and any non-21 dependent coverage (e.g., retiree coverage) pays third.
What is a birthday rule in COB?
In the context of health insurance, the “Birthday Rule” is a provision that determines the order of coordination of benefits (COB) when an individual has coverage under more than one health insurance plan. COB rules are essential when a person is covered as a dependent on multiple insurance policies, such as when both spouses have separate health insurance plans through their employers, and their children are covered under both policies.
The Birthday Rule typically works as follows:
The primary insurance is determined based on the policyholder’s birth month and day. If the policyholder’s birth date falls earlier in the calendar year, their plan becomes the primary insurance. If their birth date is later in the year, the other policy covering the dependent becomes the primary insurance. The primary insurance is responsible for processing and paying the medical claims first, up to the limits and coverage of the plan. After the primary insurance has paid its share, the secondary insurance (the plan that is not the primary) can then process the remaining portion of the claim, if applicable, up to the limits and coverage of that plan. The Birthday Rule helps eliminate disputes and confusion when coordinating benefits between two insurance plans, ensuring a clear order for processing claims. It’s essential to follow the rules of both insurance plans and submit the claims correctly to avoid claim denials or delays in payment. It’s worth noting that while the Birthday Rule is a common method used in many cases, not all insurance plans may use this approach. Some insurance companies may have their own specific COB rules, so it’s always best to check the policy documentation or contact the insurance providers directly for clarification on how coordination of benefits works for a particular situation.
Additional information regarding coordination of benefits that may be helpful follows.
Types of Coordination of Benefits
Many factors determine how COB is handled including state laws, processing policies of the carriers involved, contract laws, fully insured versus self-funded plans and types of COBS utilized. There are several different types of COBS that plans may use. A brief description of some of the more common methods follows.
1. Standard COB (Traditional/Regular COB)
- How It Works: This is the most common method. The primary insurance pays its portion of the allowable expenses first, and the secondary insurance pays the remaining amount, up to 100% of the total cost.
- Formula: Secondary Payment = Secondary Allowed Amount − Primary Payment (Secondary payment cannot exceed the remaining patient balance.)
🔢 Example:
- Charge Amount = $1,000
- Primary pays = $600
- Secondary Allowed Amount = $800
Secondary Payment = $800 − $600 = $200
Total paid: $600 (Primary) + $200 (Secondary) = $800 Patient owes remaining $200 (if applicable).
2. Carve-Out COB
- How It Works: The secondary insurance calculates its payment based on a pre-set amount (often lower than what the primary insurance pays) rather than paying the difference between what the primary insurance paid and the total cost.
- Formula: Secondary Payment = (Secondary Allowed Amount × % Coverage) − Primary Payment (Cannot exceed remaining balance.)
🔢 Example:
· Charge = $1,000
· Primary pays = $600
· Secondary Allowed Amount = $900
· Secondary Coverage = 80%
Step 1: $900 × 80% = $720 Step 2: $720 − $600 = $120
Secondary pays $120
3. Maintenance of Benefits (MOB)
- How It Works: The secondary insurance will limit its payment to the amount it would have paid if it were the only insurance, regardless of what the primary insurance pays. This may result in the insured paying part of the remaining balance.
- Formula: Secondary Payment = (Charge Amount × % Coverage) − Primary Payment (Cannot exceed remaining balance.)
🔢 Example:
· Charge = $1,000
· Primary pays = $600
· Secondary Coverage = 80%
Step 1: $1,000 × 80% = $800 Step 2: $800 − $600 = $200
Secondary pays $200
→ Difference from carve-out: MOB uses the full charge amount, not the secondary allowed amount.
4. Non-Duplication of Benefits
- How It Works: Similar to Maintenance of Benefits, but here, the secondary insurance will only pay the difference between what the primary insurance pays and what the secondary insurance would have paid if it were the primary. This ensures no “double-dipping” of benefits.
- Formula: Secondary Payment = Secondary Plan Payment Alone − Primary Payment If result ≤ 0 → Secondary pays $0 (Secondary only pays if it would have paid more than the primary did.)
🔢 Example 1 (Secondary Pays):
· Charge = $1,000
· Primary pays = $600
· Secondary would have paid $750 as primary
$750 − $600 = $150
Secondary pays $150
Example 2 (Secondary Pays Nothing):
· Charge = $1,000
· Primary pays = $800
· Secondary would have paid $750
$750 − $800 = –$50
Result is negative → Secondary pays $0