COB - why have two coverages

[Guest ADP]

I think this will be a fairly simple question for you experts.

When coordinating benefits, insurance companies will not "double" coverage. What other reason would someone have coverage from two insurance policies?

It makes sense if one insurance policy has a higher level of coverage in one area but the the secondary might be higher in another (IE better coverage in dr. visits but secondary having better coverage for hospital). I didn't know if there may be other reasons to do this.

Thanks for your help.

[mroberts]

There are two reasons as to why employees sometimes have double coverage. First, some medical and dental plans that act as a secondary plan will actually pick up a portion (or all) of the out-of-pocket expense that employees incur after the primary plan has determined what it will be reimbursing. Second, with some medical and dental plans, if the employer pays 100% of the cost, employees have to be enrolled in the coverage. Therefore, while one plan may be distinctly better, employees are still forced to be enrolled in the other plan. Since less and less employers are paying 100% of the cost for either coverage, the number of people with double coverage should be reducing.

[MGB]

Quite often is not because of an individual's choice. For example, many states require health coverage in auto insurance policies for injuries during operating a vehicle. A person may have their own coverage and also be covered under a spouse's plan with neither offering any opt-out. A person could have multiple employers, covered under each employer's plan. A person may have other vocations that provide coverage (reservists, students, etc.) in addition to having their employer's plan.

But, then, some will buy a second coverage on their own. It could be due to aggressive (and misleading) sales tactics and don't realize they are duplicating coverage they already have. Some people buy duplicate coverage thinking they can double up on the reimbursements without realizing there are COB provisions.

[Kirk Maldonado]

MGB:

It's been quite a while since I worked on any coordination of benefits issues, but I thought that those rules don't apply to individual policies. Is my memory faulty?

[KIP KRAUS]

Kirk, you are correct as far as I recall too. COB doesn't apply to individual health policies.