Secondary insurance is an extra health insurance policy that helps cover costs your primary insurance doesn’t fully pay, like copays, coinsurance, and deductibles. It kicks in after your primary insurance pays its share, reducing your out-of-pocket expenses. Common types include employer-sponsored plans, Medicare supplement plans, and policies for dental, vision, or prescription drugs.
How does secondary insurance work?
It’s pretty straightforward. Here’s how it works:
- Primary Insurance Pays First: When you get medical care, your primary insurance processes and covers its portion of the bill.
- Remaining Costs: Any leftover eligible costs—like deductibles, copays, or coinsurance—are sent to your secondary insurance.
- Secondary Insurance Covers Its Share: The secondary insurer reviews the claim and pays according to its policy.
- Coordination of Benefits (COB): Insurers work together to make sure you’re not overpaid, and the total payment doesn’t exceed the actual cost.
Example: If your primary insurance covers 80% of a procedure and your secondary insurance picks up the remaining 20%, you owe nothing. Some plans also cover things your primary insurance doesn’t, like vision, dental, or prescription drugs.
Who can have secondary insurance?
Secondary insurance is available to many people, including:
- Employees with Multiple Employer Plans: If you’re covered under your job’s plan and your spouse’s, one serves as primary, the other as secondary.
- Medicare Beneficiaries: If you have Medicare, you might have a Medigap plan, Medicaid, or retiree insurance as secondary coverage.
- Dependents: Kids and spouses covered under two plans (like both parents’ insurance) can have secondary coverage.
- Military and Veterans: TRICARE and VA benefits can act as secondary insurance.
- People with Specific Policies: Some buy extra insurance for dental, vision, or accident coverage, which acts as secondary insurance.
Bottom line: If you have access to multiple insurance plans, one will be primary, and the other can pick up the remaining costs.
Do I need secondary insurance?
It depends on your situation. Consider secondary insurance if:
- You Have High Medical Costs: If you see doctors often, have ongoing treatments, or take expensive prescriptions, it can help lower your out-of-pocket expenses.
- You Have Coverage Gaps: If your primary insurance leaves you with big deductibles or copays, secondary insurance can fill in the gaps.
- You Want Additional Benefits: Some secondary policies cover things primary insurance doesn’t, like vision, dental, or alternative medicine.
- Your Family Has Multiple Plans: If you or your dependents are covered under multiple plans, secondary insurance can provide extra protection.
- You’re Looking for Financial Protection: Consider your budget. Does the cost of secondary insurance make sense compared to what you might save on medical bills?
How do you determine which insurance is primary and which is secondary?
This is usually determined by Coordination of Benefits (COB) rules. Here’s how it typically works:
- Employer-Sponsored Plans: If you’re covered by your employer and another plan (like a spouse’s), your employer’s plan is usually primary.
- Dependent Coverage: If a child is covered under both parents’ insurance, the “birthday rule” applies—the parent whose birthday comes first in the year has the primary plan.
- Medicare and Other Insurance: Medicare is usually primary, but if you have retiree coverage or Medicaid, it often becomes secondary.
- Specific Plan Rules: Insurers have COB rules that consider factors like employment status, coverage type, and policy start dates.
- Billing Process: Providers may ask for details about other insurance plans when handling claims to determine who pays first.
Understanding how primary and secondary insurance work together can help you maximize coverage and minimize costs. If you have multiple plans, knowing how they coordinate can save you money and hassle.