Health insurance: How coordination of benefits works

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Coordination of benefits (COB) allows you to have multiple health insurance plans. COB allows insurers to determine which insurance company will be the primary payer and which will be the secondary if you have two separate plans. It also ensures insurance companies don’t duplicate payments or reimburse for more than the health care services cost.

Having two health insurance plans can make sense when one plan doesn’t provide sufficient coverage, such as when a spouse has employer-sponsored insurance and you also have coverage through your own job. It can also be beneficial for dependents covered under both parents’ plans, ensuring lower out-of-pocket costs.

However, having two policies isn’t always advantageous— if both plans have high premiums or if secondary coverage doesn’t significantly reduce expenses, the added complexity of managing claims and potential policy conflicts may outweigh the benefits. Understanding when dual coverage is useful can help you avoid unnecessary costs and administrative headaches.

Key Takeaways

Health insurance plans have a coordination of benefits system when the member has multiple health plans.
The health plan that pays first depends on the type of plan, size of the company and location.
The two insurers pay their portions of the claim and then the member pays the rest of the bill.

What is coordination of benefits?

Coordination of benefits creates a framework for the two insurance companies to coordinate benefits so they pay their fair share when both plans pay. COB decides which is the primary insurance plan and which one is secondary insurance. You can think of the secondary payer as supplemental coverage to help you pay for out-of-pocket costs.

How does coordination of benefits work?

If you use coordination of benefits for health insurance, the primary insurance pays its share of your health care costs first. Then, the secondary insurance plan will pay up to 100% of the total cost of health care, as long as it’s covered under the plan. Neither plan will pay more than 100% of the total health care costs, so you won’t get double the benefits if you have multiple health insurance plans.

Coordination of benefits rules

COB rules vary for each individual and depend on the size and type of your plans and what state you live in, as many states also have different laws in place. Additionally, large employers may have their own COB rules for medical claims.

Medicaid and Medicare: Typically, Medicaid only pays as a last resort when there are multiple plans. But medicare can be primary or secondary, depending on the circumstances. For instance, Medicare is the primary payer if the other insurer is a small business, but it’s secondary when the other payer is a large company.
Employer-sponsored plans: If you and your spouse have employer health plans, your employer is generally the primary payer for you and your spouse’s plan is secondary.
Workers’ compensation: The worker’s comp pays first and your health insurance plan would is considered secondary.
Veterans Administration (VA) and a private health insurance plan: VA is not considered a health insurance plan. Instead, the VA bills public or private health insurance providers for care, services, prescriptions and supplies. So, if your spouse has a health insurance plan, it would be your health plan.
Military coverage (TRICARE) and other health insurance: TRICARE is considered secondary to all other health plans, except Medicaid, TRICARE supplements, state crime compensation programs and other specified federal government programs. Note: If you are on active duty, you can’t use any other health insurance. TRICARE is your only health insurance coverage.

How the coordination of benefits system works

Here’s an example of how the process works:

Let’s say you visit your doctor and the bill comes to $100.
The primary plan picks up its coverage amount. Let’s say that’s $50.
Then, the secondary insurance plan picks up its part of the cost up to 100% — as long as the insurer covers the health care services.
You pay whatever the two plans didn’t cover.

That sounds great, right? Well, having two health plans also means that you’ll likely need to pay two premiums and deal with deductibles for two health plans. But, couples may choose to have two plans if they are both employer-sponsored.

Something to keep in mind:

Coordination of benefits works best when the secondary insurance significantly reduces out-of-pocket costs, such as deductibles, copays, or uncovered services from the primary plan. Before opting for dual coverage, compare premiums, benefits, and potential savings to ensure the extra policy is financially worthwhile.

How to determine primary vs. secondary insurance

If you have two health plans, one will be considered primary and the other secondary. The primary plan pays first, and the secondary plan may cover the remaining costs.

For children, the birthday rule usually applies—the parent whose birthday falls earlier in the year has the primary plan. In divorce cases, the custodial parent’s plan is typically primary unless a court order states otherwise. If both plans are through your own employers, the plan you’ve had the longest is usually primary.

When do you need coordination of benefits?

There are various situations when two health insurers need to coordinate on medical claims. You and your spouse may be eligible for two different policies from your jobs. Your spouse might be on Medicare and you have your own health plan. You might be under 26 and have your employer’s and parent’s insurance coverage.

Here is a list of situations and which plan would likely serve as the primary insurer and which ones would probably be secondary:

Situation	Who’s primary	Who’s secondary
You’re married and both you and your spouse have separate health plans	Your employer	Your spouse’s employer
A child has dual coverage by married parents	Whichever parent has the first birthday in calendar year	Parent with later birthday
A child has divorced parents	Whoever has custody	N/A
A child has own policy (from school or work) and still on parent’s policy until 26	Child’s plan	Parent’s plan
A child is married and on spouse’s policy and continues on parent’s policy until 26	Child or child’s spouse’s plan	Parent’s plan
A child under 26 is pregnant and on a parent’s plan	Child’s plan	N/A
Workers’ compensation and health insurance plan	Workers’ compensation	Health plan
COBRA and other insurance	Employer’s plan	COBRA
Medicare and a private health insurance plan	Medicare if employer has 100 or fewer employees; private insurer if more than 100 employees	Private insurer is 100 or fewer employees; Medicare if more than 100 employees
Veterans Administration (VA) and a private health insurance plan	Private insurer	N/A
Military coverage (TRICARE) and other health insurance	Other insurer	TRICARE except if other plan is Medicaid
Medicaid and a health insurance plan	Health insurance plan	Medicaid

Examples of coordination of benefits for dependents

Coordination of benefits can sometimes get complicated — especially if the healthcare plan is for a child or dependent. Here are just a few examples of how coordination of benefits works for dependents:

Married parents: The birthday rule applies—the parent whose birthday comes first in the year has the primary plan, regardless of age. If both parents share a birthday, the plan covering a parent the longest is primary.
Divorced parents: The child is typically covered by the custodial parent’s plan. If the custodial parent remarries, the step-parent’s plan may be secondary, while the non-custodial parent’s plan pays last. If custody is joint, the birthday rule usually applies. A divorce decree can override this, making the responsible parent’s plan primary.
Pregnant child under 26 on a parent’s plan: Their health coverage stays the same, but once their baby is born, the newborn must be covered under their parent’s plan—not the grandparent’s.

What are the different types of coordination of benefits?

Coordination of benefits is not one size fits all — there are a few different types of COB coverages:

Carve out: The amount your primary plan paid is deducted from how much your primary plan can pay.
Non-duplication: If the primary health insurance plan paid an amount that is equal to or more than what the secondary plan would pay, then the secondary plan does not pay out at all.
Traditional: Your health insurance plans combined can cover up to 100% of your medical expenses.

Steps to take when you have multiple health insurance plans

Managing two health insurance plans takes a little extra effort. First, let your providers know about both plans so they can bill them correctly.

Next, check each plan’s benefits and see how they work together. Understanding deductibles, copays, and what each plan covers can prevent billing surprises. Also, confirm that both insurance companies have updated records to ensure claims are processed smoothly.

You should discuss your best options and what your coordination of benefits offers with your benefits administrator or health insurance company.

Frequently Asked Questions

Can I choose which plan is primary?

No, primary and secondary coverage is determined by insurance rules, not personal preference.

Will I always pay less with two plans?

Not necessarily. If both plans have high premiums or overlapping coverage, the extra cost may not be worth it.

What happens if my providers don’t submit claims correctly?

You may have to step in and coordinate with your insurers. Keeping copies of your insurance policies and claims can help resolve issues faster.

Sources:

Medicare.gov. “Coordination of Benefits.“Accessed March 2025.

Nupur Gambhir

Managing Editor

Nupur is a licensed life, health, and disability insurance agent and an auto and home insurance expert. She has written extensively on insurance topics for QuinStreet’s CarInsurance.com, Insurance.com and Insure.com as well as for Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker and The Financial Gym.