Key Takeaways
Summary | |
Definition | Primary health insurance pays medical claims first, while secondary insurance covers some or all remaining costs through coordination of benefits. |
How It Works | Insurance carriers determine which plan is primary and secondary based on set rules, not employee choice. |
Common Scenarios | Employer-sponsored coverage is usually the primary over a spouse’s, parent’s, Medicaid, or TRICARE plan. |
Coverage for Children | When children are covered under both parents’ plans, the birthday rule typically determines primary coverage. |
Purpose | Helps individuals understand how dual health coverage works and how costs are shared between multiple insurance plans. |
Health insurance plans are something you can have more than one of. Individuals can have health care coverage under an employer-based plan while also having other coverage, such as via a spouse’s plan. And kids can have coverage under both parents’ health plans. When you are covered under two health plans, one plan is considered primary and the other is secondary. But what exactly is the difference between primary and secondary health insurance?
Primary health insurance is the plan that kicks in first, paying the claim as if it were the only source of health coverage. Then the secondary insurance plan picks up some or all of the cost left over after the primary plan has paid the claim. This is called coordination of benefits, and it’s sorted out by the insurance carriers involved—individuals don’t get to pick which plan is the primary one.
Primary vs. secondary insurance: which health care plan is primary and which is secondary?
If you have medical coverage under a plan from your employer in addition to a spouse’s or parent’s plan, your own plan will be primary and the other plan will be secondary insurance coverage. This is also true if the additional coverage is with TRICARE or Medicaid, as those plans are always the secondary insurer if you have other coverage.
There are rules to make sure that people can’t profit from medical claims by getting duplicate coverage for the same illness or injury, so the total amount paid by the primary and secondary insurer won’t be more than the total cost of the claim.
But if you have coverage under your employer’s plan as well as under Medicare, there are varying scenarios for which plan will be primary and which one will be secondary.
What if my kids are also covered under their other parent’s health insurance plan?
If your kids’ medical care is covered under both parents’ insurance plans, there are some general guidelines that help determine which plan is primary and which is secondary.
Primary coverage generally comes from the plan that belongs to the parent whose birthday comes first in the calendar year. So if one parent’s birthday is February 6 and the other’s is October 3, the kids will have primary coverage from the parent whose birthday is in February.
There are some exceptions, though:
Both parents have the same birthday: Whichever parent has had coverage under their plan the longest will be the one providing primary coverage to the kids.
Divorced or separated parents: The health plan of the parent with custody will be considered primary, and if the parents have joint custody, the birthday rule is generally used. But if there’s a court order requiring one parent to provide coverage, then that parent’s plan will be primary.
One parent has group insurance and the other has individual insurance: If one parent has employer-sponsored insurance and the other buys insurance on their own, the coverage from the parent with group insurance will be primary.
Active versus former 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 exactly how coordination of benefits for your kids will be handled.
Primary and secondary insurance FAQ
Do you need to have both primary and secondary insurance?
No, you don’t need both primary and secondary insurance. However, if you have the opportunity to join two plans, dual coverage can provide a lot of financial peace of mind.
How do primary and secondary insurance work together?
Primary and secondary health insurance work together to cover your medical bills. Here’s the breakdown: your primary insurance policy kicks in first, paying the claim as if it were the only source of health coverage. Then the secondary insurance plan picks up some or all of the cost left over after the primary plan has paid the claim. You don’t have to do anything to make this happen—the insurance carriers coordinate it all.
When should I use my secondary insurance?
You should use your secondary insurance to cover deductibles, co-pays, and other medical expenses from health care services that your primary insurance doesn’t cover completely. If you send claims to your secondary insurance provider, they’ll process them after factoring in reimbursements from your primary insurance coverage.
Does secondary insurance cover what primary insurance doesn’t?
Yes, secondary insurance covers the remaining costs your primary insurance can’t cover completely, though that doesn’t mean your costs will be 100% covered each time. Secondary insurance covers a portion of your costs up to its limit—you could still end up with out-of-pocket expenses. It’s also important to note that secondary insurance doesn’t necessarily cover costs that your primary provider denies.
Can I have multiple secondary insurance plans?
Yes, technically you can have multiple secondary insurance plans, like if you have an employer-sponsored plan, health insurance coverage with your spouse’s employer, and coverage under Medicaid. That said, this situation isn’t typical, nor will it necessarily save you more money than having dual coverage.
Can coordination of benefits affect my coverage limits?
The short answer: yes. Coordination of benefits (COB) is the process insurance companies go through to determine which health care costs will be covered by primary insurance providers versus secondary insurance providers. There are a lot of COB rules, like the birthday rule and policyholder rule, that affect your insurance policies and, therefore, your coverage limits. Unfortunately, you don’t get a say in how the process plays out.
How are deductibles handled with primary and secondary insurance?
After processing your insurance claim, the primary insurance plan pays first, covering a portion of your medical costs. Then the secondary insurance kicks in and covers a certain amount. Depending on your insurance providers and their COB rules, you might be 100% covered after both providers process your claim with no out-of-pocket costs, or you may still have a little left to pay.
Are prescription drugs covered differently under primary and secondary insurance?
Both primary and secondary insurance can cover costs for prescription drugs. The process is the same as with other types of medical costs, with primary insurance paying first, then secondary insurance paying anything left over. With both types of coverage, the prescription drug cost depends on whether or not the drug is covered under the provider’s formulary (the list of drugs they cover).
Quick note: This is not to be taken as legal, benefits, or HR advice. Since regulations change over time and can vary by location and employer size, consult a licensed broker or HR certified expert for specific guidance. See how to offer benefits with Gusto
