The healthcare industry allows patients to enroll in multiple health insurance plans. For instance, a patient may be covered by their employer-provided insurance plan, as well as via a spouse’s insurance plan. Or, a patient may be covered under their own plan as well as through a parent’s insurance. 

However, being enrolled in multiple health insurance plans can lead to an overlap or duplication of benefits. To avoid this, Centers for Medicare and Medicaid Services (CMS) has a set of provisions referred to as Coordination of Benefits or COB.

What is COB?

COB is a medical billing process that applies to a patient that is covered under more than one health insurance plan. It requires that payment of benefits be coordinated by all health insurance plans to avoid over-insurance or duplication of benefits. 

Essentially, the COB process determines whether each health insurance company is a primary or secondary payer. With COB, it is much easier to determine the responsibilities of the primary payer and settle on the contribution, if any, of the secondary payer when processing the medical claims. Under COB, the payment of benefits must be coordinated by all health insurance plans prior to payout. This helps generate the correct bill, reimburse claims, and manage a hospital’s revenue cycle.

The Purpose of the COB Process

Coordination of Benefits serves a few purposes. As mentioned above, it ensures that the primary payer (whether Medicare or another insurance company) pays out before any secondary payer(s), and, most importantly, prevents the duplication of payments if a patient is covered by more than one plan.  

Additionally, it ensures that Medicare eligibility data is shared with the secondary payer(s) to ensure secondary payments are made. This Medicare eligibility data must be shared. In case of crossover, a agreement between Benefits Coordination & Recovery Center (BCRC) and private insurance companies (for the BCRC) is required. The COB process also identifies a Medicare beneficiary’s True Out of Pocket (TrOOP) expense, which is vital to the correct administration of the Part D benefits.

Medicare as Primary Payer under COB

The following are the situations where Medicare is required to pay as the primary payer:

Working Aged (Medicare beneficiary age 65 or Older) and Employer Group Health Plan (GHP):

• Medicare pays primarily if the individual’s age is 65 or above and is covered by GHP (either through current employment or spouse’s current employment), and the employer has fewer than 20 employees. In the case of more than 20 employees, Medicare is the secondary payer.

Coverage through COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985)and Medicare:

• Medicare pays primary if the individual’s age is 65 or above.
• Medicare pays primary if the individual is disabled.

Retiree Health Plans:

• Medicare pays primary if the individual’s age is 65 or above and has an employer retirement plan.