Many Americans may wonder about the implications of having overlapping health insurance coverage (i.e. more than one health insurance policy at the same time) and whether it is safe and beneficial to do so. While it is not unheard of for some individuals to have overlapping health insurance coverage draw from different policies, where it gets a bit tricky is understanding the various claims and the specific policies that pay each claim.
In this article we would clarify the issues surrounding overlapping health insurance coverage and polices, to help you understand the pros and cons of this practice in order to make a better decision.
Under What Circumstances Can You Have Overlapping Health Insurance?
Having multiple health insurance policies is clearly not the default practice for most people. However, for some people, it may be inevitable to find oneself with overlapping health insurance coverage due to unique personal circumstances. Others with unique personal and health circumstances may also need to consider having multiple health insurance polices.
For example, married people may have coverage individually for each spouse, collectively as a couple, and another from their different employers. Similarly, older employees may have employer-sponsored coverage as well as Medicare, just as retirees may also have Medicare coverage along with an overlapping employee sponsored retiree insurance coverage.
As you can imagine, with the examples of overlapping health insurance coverage mentioned above, it can get confusing to distinguish between the different polices and their respective claims. For most people with little experience or capacity, having multiple health insurance policies can present a paperwork and logistical challenge for both the insured person and his or her insurers.
However, multiple policies and overlapping coverage does have its own benefits that may well be worth the hassle. Below, we discuss how overlapping health insurance coverage works and how to reap its benefits.
Getting the Most Out of Overlapping Health Insurance
The most important thing to master when you have overlapping health insurance coverage is how to coordinate the multiple health insurance claims. For example, if you suffer a broken arm rom an accident and you are hospitalized for treatment, you have to be sure which of your two (or more) health insurance policies would pay for the treatment.
In the case of group health insurance plans, this dilemma is typically resolved by using the so-called Coordination of Benefits (COB) guideline, which ensures that people do not unfairly realize financial gains from duplicate health coverage. The COB provision also seeks to ensure that all out o pocket and medical expenses of health insurance policy holders are covered to the extent possible.
To be sure, the question of which policy would pay for a specific claim is generally determined by whether a certain policy is designated as the primary plan or the secondary plan. This is because overlapping health insurance policies are typically divided into the two categories of primary plan and secondary plan, with clear guidelines on the kind of claims that each plan covers. Determining which plan is designated as the primary plan depends on the situation at a given time as well as the type of coverage you’re under.
While the primary plan typically pays out all its benefits, secondary plans only pay for supplementary eligible benefits after the benefits associated with the primary plan have been exhausted. This means that you can only receive benefits for up 100 percent of medical bills, but any additional expenses may have to be channeled to health insurance policies in the secondary plan.
Bottom Line About Overlapping Health Insurance Coverage
There’s no doubt that having multiple health insurance policies can be complicated and difficult to manage, but the trouble might be worth it if you consider the prospect of your secondary plans paying for claims not covered by the primary plan. This is perhaps the biggest benefit of overlapping health insurance coverage.
Certain unforeseen health circumstances may arise for which having only one plan may put you in danger of making heavy out of pocket payments that would have been avoided if you had an overlapping plan. Regardless, you should discuss with a very experienced health insurance agent for expert advice on whether overlapping health coverage is best for your situation, to help you make the right decision.