Coordination of Benefits: What to Do When You Have Multiple Policies

How does coordination of benefits work when you have multiple policies?

Coordination of benefits (COB) determines which insurance plan pays first (the primary payer) and which pays second (the secondary payer) when you have more than one policy. The primary insurer pays up to its policy limits; the secondary insurer may then pay remaining covered costs, subject to its own rules. COB prevents duplicate payments and helps keep total insurer payments from exceeding the billed amount.

In my practice helping clients with health and retirement planning for over 15 years, I regularly see preventable delays and out-of-pocket surprises caused by incorrect coordination. Knowing simple steps—verify primary status, file with the primary insurer first, keep EOBs (explanation of benefits), and notify both plans—often cuts processing time and reduces denials.

Authoritative guidance for COB comes from federal rules and plan documents. HIPAA established privacy and portability standards and reinforced COB provisions for group health plans (HHS HIPAA). Medicare has specific “Medicare Secondary Payer” rules that determine when Medicare is primary or secondary, depending largely on employer size and the beneficiary’s employment status (CMS). Medicaid remains the payer of last resort under federal law and state rules (CMS).

Sources: HHS HIPAA (https://www.hhs.gov/hipaa/index.html), CMS – Medicare Coordination (https://www.cms.gov).

Common primary/secondary rules you’ll encounter

• Employee vs. Dependent: If one plan covers the person as an active employee and the other as a dependent, the plan that covers them as an active employee is generally primary.
• Birthday rule for children: For dependent children covered by both parents’ plans, the plan of the parent whose birthday (month and day) occurs earlier in the calendar year is usually primary. This is widely used but check plan language—state or plan exceptions apply.
• Medicare and employer plans: Whether Medicare or an employer plan pays first depends on employer size and whether the person is actively working. For large employers (typically 20 or more employees), employer group health plans generally pay before Medicare for active employees. For smaller employers, Medicare may be primary (CMS – Medicare Secondary Payer rules).
• Medicaid: Medicaid pays last after all other coverage has been exhausted.
• No-fault auto or workers’ compensation: These payers may be primary for services related to an injury or workplace illness.

All plans should publish their COB rules in plan documents and member handbooks—start there.

Step-by-step checklist for managing COB (practical actions)

1. Gather documentation

• Insurance cards and policy numbers for all plans.
• Recent EOBs and medical bills.
• Employer plan handbook and any COB forms.

1. Determine likely primary payer

• Use the employee/dependent status, birthday rule (for children), and Medicare rules to make an initial determination.

1. Notify insurers immediately

• Tell each insurer about other coverage. Many plans require an initial COB form or questionnaire; complete and return these promptly.

1. File the claim with the primary insurer first

• Claim submissions should go to the primary plan. Save copies of the claim and the primary insurer’s EOB.

1. Submit remaining balance with EOB to the secondary insurer

• The secondary insurer will need the primary EOB to process payment.

1. Track and document all communications

• Keep dates, names, claim numbers, and copies of letters or emails.

1. If denied, appeal

• Use the plan’s internal appeal process and provide supporting documents. If unresolved, ERISA-regulated group plans or state regulators might be involved.

Real-world examples (condensed and anonymized)

Example 1 — Dual employer coverage
Sarah worked and had coverage through her employer while also listed as a dependent on her spouse’s plan. After surgery with a $20,000 bill, her employer’s plan (primary) paid $15,000. The spouse’s plan (secondary) paid $3,000 after receiving the primary EOB; Sarah’s remaining responsibility was $2,000. Filing in the correct order and timely submission of the primary EOB sped claims processing.

Example 2 — Medicare and a small employer
John retired and enrolled in Medicare but kept a small-employer retiree health plan. Because Medicare’s rules treat some small-employer plans as primary, John’s retiree plan became the secondary payer. That change affected which deductibles he had to meet and what portion Medicare covered (see CMS guidance on Medicare Secondary Payer).

Things that often trip people up

• Submitting the same claim to both insurers at once. File with the primary payer first; secondary insurers expect the primary EOB.
• Assuming dual coverage doubles reimbursement. Insurers coordinate to ensure payments do not exceed allowed charges.
• Missing COB reporting requirements. Some plans require periodic updates or completed COB forms—missing these can delay payments.
• Not watching for insurer recovery rights. If an insurer pays more than it should, it can seek reimbursement from you, another insurer, or a third party (subrogation).

Special situations to watch

• Divorce and separated parents: Plan order can change after divorce decrees and custody changes—update both insurers and provide court orders if needed.
• COB with Medicaid: Medicaid’s role as payer of last resort means you must file with all other coverages first. Medicaid will step in only for remaining uncovered eligible expenses.
• Workers’ compensation and auto claims: These typically take precedence for injury-related care; coordinate with your employer or auto insurer’s claims handler.
• COB with HSAs and Medicare: If you enroll in Medicare, you can no longer make or receive HSA contributions. Planning around enrollment timing can affect tax-advantaged savings—see our guide on strategic HSA use and Medicare coordination: “Strategic Use of HSAs and Medicare Coordination” (internal resource: https://finhelp.io/glossary/strategic-use-of-hsas-and-medicare-coordination/).

How COB affects your bills and out-of-pocket exposure

Coordination can influence which deductibles and out-of-pocket maximums apply, and whether you’ll face balance billing. For example, a secondary insurer may pay only after you meet a separate deductible, or it may limit payment to allowed amounts under its network. Knowing both plans’ deductible and coinsurance rules helps you predict likely out-of-pocket costs.

If you’re approaching an out-of-pocket maximum on one plan but not the other, the order of payment can materially change your cumulative costs for the year.

Appeals and disputes: practical guidance

1. Collect documentation: bills, itemized charges, primary EOB, plan documents, and letters.
2. Follow the insurer’s appeal timeline precisely—there are strict deadlines.
3. Use the plan’s internal appeal first; ERISA plans then have an external review option. For Medicare denials, follow CMS’s appeal process (find details on the CMS site).
4. If appeals fail, consider state insurance regulators or, for ERISA plans, federal court as a last resort.

Short checklist to hand a medical office (to speed claims)

• Primary insurer name, policy number, and claims address
• Secondary insurer name and policy number
• Employer information (if employer-sponsored plans involved)
• Copy of both insurance cards

Give the medical office this information before services when possible. It avoids claim misrouting and can prevent surprise bills.

Internal resources and further reading

• For retirees and near-retirees: read our piece on “Medicare Basics: What Retirees Need to Know” to understand Medicare’s role with employer coverage (internal: https://finhelp.io/glossary/medicare-basics-what-retirees-need-to-know/).
• If you’re enrolling around age 65: see “Medicare Enrollment Mistakes That Can Cost You” for timing pitfalls and how they interact with COB (internal: https://finhelp.io/glossary/medicare-enrollment-mistakes-that-can-cost-you/).
• Strategic planning around HSAs and Medicare: “Strategic Use of HSAs and Medicare Coordination” explains contribution rules and timing (internal: https://finhelp.io/glossary/strategic-use-of-hsas-and-medicare-coordination/).

Final professional tips

• Proactively identify the primary payer before treatment when feasible.
• Keep electronic and paper copies of EOBs and claim forms—digital photos work in a pinch.
• Ask your HR department for the plan’s COB contact; they often handle forms that speed resolution.
• If an insurer overpays or you’re billed incorrectly, ask for a written explanation and the EOB that caused the issue.

Professional disclaimer

This article is for educational purposes and general guidance only and does not replace personalized legal, tax, or insurance advice. For decisions that affect your finances or health coverage, consult your plan documents, your employer’s benefits administrator, or a licensed insurance or financial professional.

Authoritative sources: U.S. Department of Health & Human Services — HIPAA (https://www.hhs.gov/hipaa/index.html); Centers for Medicare & Medicaid Services — Medicare Coordination and Medicare Secondary Payer rules (https://www.cms.gov).