Six months ago I wrote a post about calculating the benefits of dual coverage. At the time, my employer was switching health insurance plans so that my husband and I would both have Anthem through our employers, and he would have dual Anthem coverage with different benefit levels. Once we learned he was scheduled for surgery, I called to find out how the benefits would be coordinated under two Anthem plans. What Anthem told me was completely incorrect, but it worked in our favor. So here’s how it really works.

Coordination of Benefits Under Competing Insurers
Previously, my employer offered United and my husband’s employer offered Anthem. Under that plan, United paid for anything Anthem didn’t cover, except doctor and prescription co-pays. Under those plans, he paid the Anthem co-pay level, which was sometimes higher, sometimes lower. We ended up paying nothing for tests and treatments beyond the initial co-pay.

Coordination of Benefits Under the Same Insurer with Different Plans
When I called Anthem to find out how it would work, I was told that he’d need to pay the higher co-insurance and deductible on his Anthem plan before my Anthem would cover anything. This is completely incorrect. Instead, it works exactly as if they were competing insurers. We pay doctor and insurance co-pays, but nothing else. So far the hospital bill alone has come to $277,000 (cost before insurance). To date, we’ve paid $60 in doctor co-pays and $200 in prescription co-pays, which is coming out of our FSA.

Here’s how it works:

Hospital submits claim to Anthem A (husband’s plan). They pay 70% of the bill up to the out-of-pocket max, after which they pay 100%. His out-of-pocket maximum is $4000 and his deductible is $2000.

Anthem A pays the hospital 70% of the negotiated rate. So, if it was a $1000 negotiated rate, they would pay $700. Since it was $277,000, they paid $100,000 of the negotiated rate of $104,000. If we didn’t have secondary insurance, we would have been billed for $4000.

The hospital sends the entire claim to Anthem B (my plan). Anthem B pays 90% of the negotiated rate. If it was $1000, they would pay $900, except Anthem A already paid $700, so Anthem B would pay $300. Since the negotiated rate was $104,000 and the Anthem A paid $100,000, Anthem B paid the remaining $4,000. We get billed for nothing.

Now that the $4,000 out-of-pocket max and the $500 deductible on my husband’s plan have been exceeded, Anthem B won’t receive any more bills. Anthem A will pay it all.

So, if my husband’s employer didn’t generously provide him with free health insurance, and my employer didn’t generously provide both us with free health insurance, we would have either been responsible for $4500 (his plan) or $2500 (my plan.) We were actually responsible for $0.

The downside is that we relied on what Anthem told me when setting our FSA contribution for the year and now have to figure out how to spend $2000 by December 31. We’ll find a way, it just wasn’t something we planned on.

Coordination of Benefits Under Same Insurer, Same Plan
If you both work for the same company, then you have the same plan and are only covered once each. You can’t double up under the same plan. If you have a $4,000 out-of-pocket max, that’s what you have to pay.

Doing Your Own Insurance Calculations
So, if one or both of your employers offer free insurance for one or both of you (and dependents), there’s no reason not to take it. If they offer you a bonus for declining coverage (and the declining spouse and dependents have alternative coverage), figure out if the bonus would cover the deductible gap if you did have a major medical bill. For example, if you’re offered $300 a month to decline coverage for the your spouse and two dependents, and have a $4000 out-of-pocket max under the other plan, you’d almost break even in the event of one major medical event. You’d come out ahead if there are none.

However, if you have to pay a premium for coverage from one or both employers, the premium cost may exceed any benefits you’d receive through coordination of benefits. For example, if you have to pay $2500 a year for an extra $4000 in coverage, you’d be better off putting the $2500 in your emergency fund.

Comments

3 Responses to “Update on Dual Health Coverage”

  1. Caro on March 31st, 2010 5:50 am

    Wow, it does sound like it’s going to be a challenge to spend the 2K in your FSA. When you get all done for the year, I would love to hear how you did it.

  2. Ryan on May 5th, 2010 1:05 pm

    My wife and I have completely different health plans, both through our individual employers. We are expecting a baby in 4 weeks and we want to have dual coverage. I pay a premium (deducted from my paycheck) each month, but my wife’s coverage is paid in full by her company. Each of our plans have roughly the same copays, deductibles, Out-of-pocket max, etc. When the baby is born, should me and the baby go on her plan, and use my plan as secondary? Or vice versa?

  3. Aryn on May 5th, 2010 5:15 pm

    If you have insurance through your employer, it will always be your primary, regardless of how you want it to be.

    For the baby, see if you’d have to pay a premium under both plans. It may cost more to have two premiums than you’d save through dual coverage. However, if you can get free dual coverage, then the primary would be the plan for the parent with the earlier birthday (not age, the actual day of the year.) If your birthday is April 1 and your wife’s is April 2, yours is primary. If it’s vice versa, hers is primary.

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