Secondary insurance is an additional health insurance policy that covers costs not fully paid by primary insurance, such as copayments, coinsurance, and deductibles. It supplements primary coverage by paying remaining eligible expenses after the primary insurer has paid. Examples include employer-sponsored and Medicare supplemental plans, providing more comprehensive coverage and reducing out-of-pocket costs.
How does secondary insurance work?
Secondary insurance works by covering costs not fully paid by primary insurance. Here’s how it functions:
- Primary Insurance Pays First: When you receive medical care, your primary insurance processes and pays the claim according to its terms.
- Remaining Costs: Your secondary insurance bills any remaining eligible expenses, such as copayments, coinsurance, or deductibles.
- Secondary Insurance Covers: The secondary insurance reviews the claim and pays for costs covered under its policy but not covered by the primary insurance.
- Coordination of Benefits: Both insurers coordinate to ensure the total payment does not exceed the actual cost of care.
- Policy Terms: The extent of coverage and specific benefits depend on the terms of the secondary insurance policy.
For example, if your primary insurance covers 80% of the cost for a medical procedure and you have a secondary insurance plan that covers the remaining 20%, your out-of-pocket costs would be fully covered. Secondary insurance can also help cover expenses such as prescription drugs, vision, and dental care, not typically covered by Medicare or other primary insurance plans.
Who Can Have Secondary Insurance?
Secondary insurance can be available to a wide range of individuals, including:
- Employees with Employer-Sponsored Plans: Employees may have secondary insurance if covered under multiple employer-sponsored plans (e.g., through their job and their spouse’s job).
- Medicare Beneficiaries: Individuals enrolled in Medicare can have secondary insurance through Medigap plans, retiree insurance, or Medicaid.
- Dependents: Children and spouses covered by two insurance plans, such as their own and a parent or spouse’s plan, can have secondary insurance.
- Military Personnel and Veterans: TRICARE and VA benefits can be secondary insurance for military members and veterans.
- Individuals with Specific Policies: Those who purchase additional policies, like dental, vision, or accident insurance, can use these as secondary coverage.
Secondary insurance provides added financial protection by covering costs not fully paid by primary insurance, benefiting those with high medical expenses or multiple coverage options.
Do I Need Secondary Insurance?
Whether you need secondary insurance depends on your personal circumstances and healthcare needs:
- High Medical Costs: Secondary insurance can help reduce out-of-pocket expenses if you have chronic conditions, frequent medical visits, or expensive treatments.
- Coverage Gaps: Secondary insurance can cover costs not fully paid by primary insurance, such as deductibles, copayments, and coinsurance.
- Additional Benefits: Some secondary policies offer benefits not covered by primary insurance, like dental, vision, or prescription drugs.
- Family Coverage: Secondary insurance can provide extra financial protection if you or your dependents are covered under multiple plans.
- Financial Situation: Consider your budget and ability to pay for additional premiums versus potential savings on medical expenses.
Assess your healthcare needs, coverage, and financial situation to determine if secondary insurance benefits you.
How do you determine which insurance is primary and which is secondary?
Determining which primary and secondary insurance typically follows specific rules known as “coordination of benefits” (COB) guidelines. Here’s how it generally works:
- Employer-Sponsored Plans: If you have coverage through your employer and are also covered as a dependent under another plan (e.g., spouse’s employer plan), your employer plan is usually primary.
- Dependent Coverage: When a child is covered under both parents’ plans, the primary insurance is determined based on the “birthday rule,” where the plan of the parent whose birthday (month and day) comes earlier in the calendar year is primary.
- Medicare and Other Coverage: Medicare generally pays first for beneficiaries with other insurance, such as retiree coverage or Medigap plans, which cover some or all remaining costs.
- Specific COB Rules: Each insurer has specific COB rules to determine primary and secondary status. These rules may consider factors like the type of coverage (e.g., group vs. individual), effective coverage dates, and whether coverage is due to active employment or retirement.
- Coordination Process: Providers or insurers may request information about other coverage during billing to determine which insurance pays first and second.