Coordination of Benefits (COB) is an insurance policy provision designed to help avoid duplicate benefit payments and manage insurance claims when an individual is covered under more than one insurance plan. This provision sets rules for the order in which multiple insurance carriers pay claims and clarifies how long each insurer needs to submit a claim based on their policy.
Purpose
The main goals of the COB include:
Preventing Overinsurance: COB helps to prevent situations where the combined insurance payouts exceed the incurred medical expenses, reducing instances of possible abuse or unnecessary overpayment.
Efficient Claims Processing: Establishes which insurance plan pays first (primary insurance) and how subsequent plans (secondary insurer, tertiary, etc.) will handle remaining costs, ensuring a methodic and orderly system of claim resolution.
Minimize Benefit Discrepancies: It coordinates the benefits to ensure that the total amount paid among all types of insurance is as close as possible to 100% of the total expenses without exceeding them.
Legal and Regulatory References
The process of COB is extensively regulated by state insurance regulations and guidelines established by regulatory bodies in various countries. COB provisions can also vary based on state laws.
In the United States, guidelines and standard practices can also be found in the Employee Retirement Income Security Act of 1974 (ERISA), which sets standards and best practices for employer-based insurance plans.
For more specific regulations, you can typically check local government or state insurance department websites.
Applying Coordination of Benefits
Users who are covered by more than one health insurance policy might encounter COB while filing claims. If policy holders have questions about how COB applies to their particular plans, reaching out to a health insurance representative can provide personalized guidance and clarify responsibilities before submitting a claim. It is advisable to include all pertinent insurance information when claims are submitted to ensure correct processing under the terms of COB.
Reference material and further reading about insurance claims processing can be often found on healthcare and insurance governmental sites, as well as in all reputable insurance handbooks.
