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Coordination of Benefits pertaining to Illinois Health Insurance
If you are covered by two or more group health insurance policies, you may be familiar with the term COB, short for coordination of benefits. Group insurance was designed to cover major medical expenses; however, it was never intended to pay in excess of 100% of incurred charges. For this reason, COB was established as a method by which two or more carriers or plans could coordinate their respective benefits so the total benefit paid does not exceed 100% of the total allowable expenses incurred. In Illinois, the COB Regulation specifies how benefits are to be coordinated by insurance companies issuing group policies in the state.
NOTE: Individual health insurance policies do not have to comply with the COB rules. Those policies may have special provisions in place if you have more than one policy. You should review your individual health insurance policy to see how it pays if other insurance is involved.
Who Pays First? Who Pays Second?
The first question when there are two or more group carriers involved is "Who is Primary Carrier, Who is Secondary Carrier" and so on? The primary carrier is the plan that pays first, the secondary carrier pays second and on down the line. The COB Regulation provides guidelines for the general order by which the primary carrier and secondary carrier(s) are determined as follows:
Employee, Member or Subscriber
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The plan that covers you as an employee, member or subscriber is primary over the plan that covers you as a dependent.
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The plan that covers you as an active employee (not as a laid-off employee or retiree) is primary over the plan that covers you as a laid-off employee or retiree.
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If you are covered as an employee, member or subscriber under more than one plan, but are covered under state or federal continuation (COBRA) under one of the plans, then:
The plan covering you as an employee, member or subscriber is primary over the plan covering you under state or federal continuation (COBRA).
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If you are covered as an employee, member or subscriber under more than one plan, and none of the above rules apply, then:
The plan that has been in effect the longest is primary, back to your original effective date under your employer group, whether or not the insurance company has changed over the course of coverage.
Dependent Children of Parents Not Separated or Divorced
- Birthday Rule - The plan covering the parent whose birthday falls earlier in the year is the primary carrier.
If both parents have the same birthday, the plan that has provided coverage longer is the primary carrier.
NOTE: Birthday refers only to the month and day in a calendar year, not the year in which the person was born.
NOTE: Some plans not covered by state law may go by the Gender Rule for dependent children. This rule states that the father's coverage is the primary carrier. In the event of a disagreement between two plans, the gender rule applies.
Dependent Children of Separated or Divorced Parents
If your child is covered by more than one group plan and you are separated or divorced from the other parent, the plans must pay in the following order:
- First, the plan of the parent with custody of the child;
- Then, the plan of the spouse of the parent with custody of the child;
- Finally, the plan of the parent not having custody of the child.
However, if terms of a court decree state that one parent is responsible for the health care expenses of the child, and the insurance company has been advised of the responsibility, that plan is primary carrier over the plan of the other parent.
Dependent Children of Parents With Joint Custody
The birthday rule applies in this situation.
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