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What’s the Difference Between Primary and Secondary Health Insurance

Health insurance plans are things that you can have more than one. People can have coverage under an employer-based plan while also having other coverage, such as through a spouse’s plan. And children can have coverage under both parents’ health plans. When you are covered under two healthcare insurance plans, one plan is regarded as primary, and the other is secondary. But what precisely is the difference between primary and secondary health insurance?

Primary healthcare insurance is the plan that kicks in first, paying the claim as if it were the only source of healthcare cover. The secondary insurance plan covers some or all of the costs left over after the primary health insurance has paid the claim. This is known as coordination of benefits, and it’s sorted out by the insurance carriers involved—people don’t get to pick which plan is the primary one.

Determining Primary and Secondary Health Insurances

If you have coverage under a plan from your employer in addition to a spouse’s or parent’s plan, your plan will be regarded as primary, and the other plan will be secondary. This is also true if the additional coverage is with TRICARE or Medicaid, as these plans are always the secondary insurer if you have other coverage.

There are rules to ensure that individuals cannot profit from medical claims by getting duplicate coverage for the same illness or injury, so the entire amount paid by the primary and secondary insurer will not be more than the total cost of the claim.

But if you have coverage under your employer’s plan and Medicare, there are varying situations for which plan will be primary and which one will be secondary.

What if My Children Are Also Covered Under their Other Parent’s Health Insurance Plan?

If your children are covered under both parents’ plans, some general guidelines help determine which plan is primary and secondary insurance.

Primary coverage basically comes from the plan that belongs to the parent whose birthday comes first in the year. So, if the birthday of one parent is February 6 and the other’s is October 3, the children will have primary coverage from the parent whose birthday is in February.

There are some exemptions, though:

• Both parents have the same birthday: Whichever parent has had coverage under their plan, the longest will be offering primary coverage to the children.
• Divorced or separated parents: The health plan of the parent with custody will be regarded as primary, and if the parents have joint custody, the birthday rule is usually used. But if there’s a court order necessitating one parent to provide coverage, then that parent’s plan will be primary.
• One parent has individual insurance, and the other has group health insurance: If one parent has employer-sponsored insurance and the other shops insurance on their own, the coverage from the parent with group insurance will be primary.
• Active versus previous employees: If one parent is a current employee, and the other is a former employee receiving retiree or COBRA health benefits, the plan for the active employee parent will be primary.

These are not hard-and-fast rules, though, so double-check with both insurance companies to see precisely how the coordination of benefits for your children will be handled.

Resources and References:

• Benefits of COBRA Insurance
• Differences Between Primary and Secondary Health Insurance