Active/inactive employee

The benefits of a plan which covers a person as an employee who is neither laid off nor retired (or as that employee’s dependent) are determined before those of a plan which covers that person as a laid off or retired employee (or as that employee's dependent). If the other plan does not have this rule and if, as a result, the plans do not agree on the order of benefits, this rule is ignored

Some health insurance plans describe Coordination of Benefits in the Benefit Manual or Summary Plan Description (SPD). For example, the following is from an employer SPD: Coordination of Benefits (COB) applies when an individual has health care coverage through more than one group program. The purpose of COB is to insure that the individual receives all of the coverage for which the individual is entitled, but no more than the actual cost for the care received. In other words, total payments from all of the insurance coverage combined cannot be more than the total charges incurred.

As you can see, COB can be very complicated. Lets look at the following examples:

EXAMPLE: SFC Stewart Lee is former military with veterans benefits. He resides in Orlando, Florida. His place of veterans treatment is the VA hospital located in Tampa, Florida. SFC Lee also has Medicare Part B as coverage. SFC Lee was seen at the Our Lady of The Blessed Acne hospital in Orlando. He asks that the claim be sent to Medicare Part B. Medicare know SFC Lee has coverage through the Veterans Administration. In this case, either Medicare or the VA is primary. Medicare doesn’t pay for what the VA doesn’t pay and the VA doesn’t pay for what Medicare doesn’t pay. Once Medicare makes its payment, SFC Lee can be responsible to the provider for any co-insurances and deductibles. Under normal circumstances with commercial health insurance, you might send the Medicare EOB to the commercial insurance company. Two things could happen. The insurance company could pay the coinsurance and/or deductible or they could deny payment by stating they don’t pay anything more than what the primary insurance company paid. This may be a clause in the patient’s health insurance contract. However, KNOW YOUR STATE COB LAW. With Medicare and the VA, SFC Lee cannot ask that the Veterans Administration be billed to pay what he owes. If SFC Lee asks that the VA be billed first, any payment that is made by the VA is considered as payment in full. I once had a SFC Lee case. He said WE made a mistake in billing Medicare. However, we followed his telephonic instructions. We refilled the claim to the VA, they paid what they would normally pay and we refunded Medicare the payment they made. From that point on, it became office compliance policy that under NO circumstance was a patient claim with Medicare and VA to be sent to Medicare without written instructions from the patient.

Last, when working for a physician, make sure you read the providers contract regarding COB. The provider may be contracted with Blue Cross and Blue Shield. The patient may have BCBS as primary or secondary. It is important to know how your claim will be paid when sent as secondary with BCBS or with BCBS as a Medicare HMO. The patient may have United healthcare as primary. They paid $120 of a $150 claim. The contract with BCBS may pay $80% of the Medicare allowable. The allowable may be $100, so all the provider is entitled to be paid as a contracted provider. The claim as secondary may be denied as the primary paid more than the contracted amount. Knowing your COB law can help you fight back.