Primary vs. secondary coverage: How does it work

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In a world where bigger is often better, does it make sense to supersize your medical coverage by carrying two health insurance plans?

Some policyholders have two health insurance plans rather than just one. For example, some seniors enrolled in Medicare also have a health insurance policy through an employer. Others may have coverage both through their own workplace and that of their spouse.

With dual health insurance plans, one is considered primary while the other is deemed secondary. In some situations, having two health insurance plans can reduce your out-of-pocket costs. But in other cases, the added premium payment and deductible might increase your overall health expenses and cause further complications.

Key Takeaways

Having two health plans can help cover normally out-of-pocket medical expenses, but also means you’ll likely have to pay two premiums and face two deductibles.
Your primary plan initially picks up coverage costs, followed by the secondary plan. You might still owe out-of-pocket costs at the end.
Health plans have coordination of benefits, which is a process that decides which plan is primary and which one pays second.
In many cases, the benefits of having a second plan are modest. But there are situations where it can pay off.

Can you have two health insurance plans?

Yes, you can have two health plans.

The most common example of carrying two health insurance plans is Medicare recipients, who also have a supplemental health insurance policy, Mordo says.

While that type of coverage is relatively common, other instances of dual health insurance plans are unusual, but do occur.

For example, it’s possible that a married couple could have two health insurance plans, even if each spouse is covered through a health insurance plan at their workplace.

You also might have two health insurance plans if you have health insurance through an employer, but also receive Medicaid or Medicare coverage. For example, some seniors may continue to work past the age of 65, in which case both Medicare and an employer-based plan can cover them.

“The reason why active employees stay on that employer plan is because of the prescription drug coverage,” Mordo says. “That’s a huge advantage.”

You might have two health insurance plans under the following circumstances:

You’re an injured worker who qualifies for worker’s compensation but also have your own insurance coverage.
You’re a military veteran covered by Veterans Administration benefits and your health plan.
You’re an active military member who is covered by military coverage and his or her own health insurance.

Primary and secondary insurance rules

When you have two forms of health insurance coverage, your primary insurance pays the first portion of the claim up to your coverage limits. Your secondary insurance may pick up some or all of the remaining costs.

how does primary and secondary insurance work

However, you still might be responsible for some cost-sharing. For example, it’s a mistake to think your secondary insurance will kick in and cover the deductible attached to your primary insurance. Instead, you likely will be responsible for covering the deductible.

You also may be responsible for copay and coinsurance fees.

How coordination of benefits works

When you have primary and secondary health plans, the insurers use a framework to work together. That way, both health plans pay their fair share without paying more than 100% of the medical costs. This process is called coordination of benefits.

Coordination of benefits decides which plan pays first (the primary plan) and which pays second (the secondary plan).

Sometimes, a state or the federal government may set up the COB regulations. Large employer group plans create their own COB rules, too.

Here’s how COB works when there’s a health insurance claim:

It first goes to the primary plan. The insurer pays what it owes.
If money is still left on the bill, it then goes to the secondary insurer, who picks up what it owes.
After that, if there’s still money left on the bill, the member gets a bill for the remaining money.

What is the difference between primary and secondary health insurance?

When a member has double insurance, his or her individual circumstances determine which insurance is primary and which is secondary. Following are some examples of how this might work:

A married couple — A wife has a health plan with her employer, but her husband’s health plan also covers her. In this case, the wife’s employer is the primary insurer and the spouse’s health plan is secondary.
A child under 26 — The Affordable Care Act lets children stay on their parents’ health plan until they turn 26. That could result in a child having her own health plan through an employer while remaining on the family’s plan. In that case, the child’s health plan is primary and the parents’ plan is secondary.
Parents have separate plans and a child is on both plans– In this situation, the so-called birthday rule applies. Whichever parent has the earlier birthday in a year is considered the primary health plan and the other spouse is secondary. It’s not which parent is older. Instead, it’s which one has the earliest birthday in a calendar year.
Medicare and a private health plan – Typically, Medicare is considered primary if the worker is 65 or older and his or her employer has less than 20 employees. A private insurer is primary if the employer has 20 or more employees.

How does primary insurance work?

The primary insurance payer is the insurance company responsible for paying the claim first.

When you receive health care services, the primary payer pays your medical bills up to the coverage limits. The secondary payer then reviews the remaining bill and picks up its portion.

Coordination of benefits rules determines which of your insurance companies is the primary payer.

The secondary health insurance payer covers bills that the primary insurance payer didn’t cover.

How does secondary insurance work?

After the primary insurer has paid its part of the insurance claim, the remainder of the claim moves on to the secondary insurer. The No. 2 insurer then pays its portion of the claim.

However, it is crucial to remember that the secondary insurance company may not pay the rest of your bills. You may be responsible for some health care costs.

Also, the primary and secondary insurance companies make sure they aren’t paying more than 100% of the overall bill. They do this through a process known as “coordination of benefits” that helps to make sure each company pays its own part of the claim without overlap.

For example, Jane is 66 and still works at a full-time job. She is enrolled in both Medicare and in her employer’s health insurance plan. Because she works for a bigger company, one with more than 20 employees, her employer-based plan is considered to be her primary insurer.

That means that if Jane has an operation, her primary insurer will get the claim first and pay out the portion that is its responsibility. After that, the claim will go to Medicare, which will pay out whatever remains up to Medicare’s responsibility.

Any portion of the bill not covered by the employer’s health insurance plan and Medicare would then be the patient’s responsibility.

Here is another example: Jim is a student who has coverage through his college and through his parents’ insurance plan. In this situation, the college plan is primary and would get the claim first. Whatever is left over from the claim then would move to his parents’ plan.

Primary insurance vs secondary insurance: Who pays first?

Coordination of benefits isn’t always standard. Plans can differ, so it’s vital to talk to your employer’s benefits department and health plan if you have two health plans.

That said, here are situations when you may have more than one health plan and which one would likely be the primary insurer and which would be secondary:

Situation	Primary	Secondary
Married; both spouses have plans	Your employer	Your spouse’s employer
Child with two plans from married parents	Parent with earlier birthday in calendar year	Parent with later birthday
A child has divorced parents	Parent with custody	—
A child with own policy (from school or work) and still on parent’s health plan	Child’s plan	Parent’s plan
A child is married and on spouse’s and parent’s policies	Child’s spouse’s plan	Parent’s plan
A pregnant child on a parent’s plan	Child’s plan	—
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	—
Military coverage (TRICARE) and other health insurance	Other insurer	TRICARE except if other plan is Medicaid
Medicaid and other plan	Other insurer	Medicaid

What are the advantages and disadvantages of having two health insurance plans?

There are both advantages and disadvantages to carrying two health insurance plans:

Pros:

You may have more coverage options when you carry two plans, which means your costs could be reduced.
Sometimes — as with having prescription drug coverage through an employer-based plan instead of more expensive drug coverage via Medicare — the savings can be significant.

Cons:

You may have to pay premiums for two plans.
The benefits of having two plans are usually — though not always — modest, and the cost of premiums may outweigh any benefits.
Having two insurance plans can make the claims process more complicated, especially if you have disputes with one or both insurers.

When you have both primary and secondary insurance, each plan pays a portion of your medical bills. Your primary insurer is the one who pays first – up to the coverage limits. The secondary insurer then pays any remaining costs.

It’s important to understand how your particular insurance plans work together in order to get the most coverage.

Frequently asked questions

What is double insurance coverage?

Double insurance coverage occurs when two health insurance policies cover an individual. This can happen if an individual has both employer-sponsored health insurance and an individual health insurance policy or if an individual is covered by their spouse’s health insurance policy as well as their own.

While double coverage can provide some financial protection in an accident or illness, it can also lead to higher costs. You have to pay two premiums and two deductibles if you have two plans.

How do you determine which health insurance is primary?

Determining which health plan is primary is straightforward: “If you are covered under an employer-based plan, that is primary,” Mordo says.

If you also were covered under a spouse’s plan, that would be secondary, he adds.

In certain situations, seniors who are 65 and still working may be covered under their employer’s plan and eligible for Medicare.

“Depending on the size of the employer, Medicare can be primary or Medicare can be secondary,” Mordo says.

If the employer has 20 or more employees, the employer’s health plan will be primary, and Medicare will be secondary.

How do deductibles work with two insurances?

If you carry two health insurance plans and have deductibles with each plan, you’re responsible for paying both of them when you make a claim.

In other words, don’t expect that if you pay a deductible on one plan, it will eliminate your obligation for the deductible on the other plan.

Does secondary insurance cover the primary deductible?

Typically not. If you have a deductible on one or both plans, you will need to pay those deductibles before your insurance reimburses you for care.

“Depending on the type of plan you have, there is not necessarily a pass-through or a honoring of a deductible from one plan design to the next,” Mordo says.

Chris Kissell

Contributing Researcher

Chris Kissell is a Denver-based writer and editor with work featured on U.S. News & World Report, MSN Money, Fox Business, Forbes, Yahoo Finance, Money Talks News and more.