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Coordination of Benefits

What is coordination of benefits (COB)?

Many individuals have two or more sources of health insurance coverage. Coordination of benefits (COB) enables health insurance providers to determine which plan is primary and which is secondary. The primary health insurance plan pays first; if there are additional expenses once coverage from the first health insurance plan has been used up, the second health insurance plan will then provide additional coverage. If payment is still owed after coverage from both health insurance plans is used up, the patient pays for those expenses out of pocket.

There are many situations in which COB is required to make sure each health insurance company is paying its fair share of a patient’s expenses. One common example is if an individual is under the age of 26 and still on their parent’s health insurance plan but is also employed with a workplace health insurance plan of their own. Another common example is if children are covered as dependents under both of their parent’s health insurance plans.

Why is coordination of benefits (COB) important in healthcare?

Understanding the specifics of COB enables patients to manage their health insurance payments more efficiently. If there is a problem with billing, patients know which health insurance company to contact regarding payment, saving them time and hassle.

From a health insurance provider’s perspective, coordination of benefits is highly effective because it prevents either company from accidentally overpaying for services. Since the cost of medical care is frequently tied to health insurance rates, coordination of benefits allows patients to pay less indirectly for healthcare services because health insurance companies are operating more efficiently.