Which insurance is primary when you have coverage through two employers?

Question

If someone has health insurance coverage in the U.S. through two separate employers, which is considered primary for the coordination of benefits? How is this determined?

Answer 1

This will depend on a lot of things, in particular the state. One example is in california from their coordination of benefits regulations:

(4) For the purposes of paragraph (3), use the first of the following rules establishing the order of determination which applies:

(I) When subparagraphs (A) through (H) do not establish an order of benefit determination, the benefits of a Plan which has covered the person on whose expenses claim is based for the longer period of time shall be determined before the benefits of a Plan which has covered such person the shorter period of time.

A through H resolve the "typical" issues (Self before dependent, "birthday rule for equal dependents, etc.); I says, then, "if nothing else, the earlier plan is primary and the later plan is secondary".

Other states likely use similar rules, for example illinois has the same basic rule, with some extra detail to help determine which is first.

Of course, if you start two jobs on the same day, who knows what order it would be in. Up to the two companies to figure out I suppose!

Answer 2

The logic in picking primary/secondary is done at the state level.

Having two health insurance policies because you have two employers offering insurance is not a situation that many people are in. Sometimes a couple has access to two policies, but it is rare for one person to have two policies. Sometimes there is a overlap when the old employer provides coverage until the end of the month, and the new one provides coverage one day one of the new job; though in this case you will frequently not even get all the cards, and account information until a week or two has passed.

Some people see a small benefit if they can use the secondary policy to cover some of the out-of-pocket costs of the primary policy. But the headache of two sets of deductibles, and the requirement to manually file with the secondary company to make sure items aren't reimbursed doubly generally discourages most people from wanting this.

In cases where a person is faced with this situation: such as when they are retired from one place and get insurance as a free benefit; and a current full time job; they ask for the company to either pay them a stipend because they are declining coverage, or an extra benefit such as additional vacation days. The stipend can be large enough to greatly reduce their out of pocket costs.