Calculating the Benefits of Double Health Insurance

I have generous health insurance through my employer, which covers me and my spouse (and dependents, were I to have any) without cost to us. My husband also has free coverage for himself through his employer. That’s served us well in the past when our employers bought insurance through different insurers. My insurance counted payments from his primary coverage toward his deductible under my plan. They also covered the portion we would have paid as a deductible under his plan. They then covered the 30% gap in coverage, so we paid almost nothing for his care. Unfortunately, that will all change in January when we will both be covered through the same insurance company, but under different employers. Depending on how your coverage works, double coverage could save you a small fortune, or it could cost you one.

Choosing a Primary Insurance Provider

If you and your spouse both have coverage, you can opt for double-coverage under your plans. Some employers require you to pay to cover a spouse and dependents, some don’t. However, there are some tricky aspects to choosing a primary insurance provider. Your employer’s insurance is your primary, and the same for your spouse’s insurance through his or her employer.

If you have children, you can add them to either or both plans. If you had them to both plans, the insurance for whichever spouse has the earlier birthday in the year will be primary. If you were born May 5 and your spouse was born May 6, your insurance would be primary. The year of birth or age of the spouse is irrelevant.

Paying Deductibles

Deductibles can be tricky. Some will use deductible payments under one plan as deductible payments under the other, and some won’t. Now that my husband and I will have insurance from the same insurer, we’ll have to pay two deductibles in order for him to receive coverage under both plans. That brings our total out-of-pocket from $500 to $750 if we use both plans for him.

The Co-Pay Gap

Typically, you’ll pay the basic co-pay when you visit a doctor and the insurance pays the rest. This is true even with double coverage (only one co-pay is required, not two.) However, most plans only cover a portion of non-basic care, tests, etc. For example, my plan covers 90% and I pay 10%. My husband’s covers 70% and he pays 30%. Under our old double coverage, my insurance picked up that other 30%, so we paid nothing. Under our new double coverage, my insurance will only pay the gap between mine and his, so they’ll pay 20%, leaving us to pay 10%. Frankly, my employer is getting cheated on that one.

When Does It Make Sense to Use Both Policies

Since we’ve already covered our deductibles for the year, those will carry over to the new plan until the end of 2009. My husband can continue to use both policies to cover 90% of our costs. Once we get into 2010, we’ll have to decide whether it’s worth it to submit claims under the secondary insurance. So let’s do the math:

Basic care: Same co-pay, same coverage. There’s no benefit to using both plans for basic care.
Prescriptions: Same co-pay, same coverage. No benefit.
Expensive tests: Here’s where it could get tricky. Let’s say he needs a test that costs $1000. If it’s his first test of the year, we’d owe $500 and his insurance would pay the rest (the 30% is included in the $500). If we also submitted my insurance, we’d actually pay $750 for it.
Surgery: What if he needed surgery, which could easily run into the thousands of dollars. We’ll say $12,000 to be conservative. If his deductible hadn’t been met, we’d pay $500 for that, plus $3100 for his contribution. If we then added my plan, we’d pay $750 for the two deductibles, but the secondary insurance would kick in an additional 20%, so our contribution would only be $1200. In this case, the double-coverage would save us $1650.

Alternative Care: Most policies will cover a portion of a certain number of chiropractic, acupuncture, physical therapy, or mental health visits in a year. With double coverage, he can get covered up to the combined limit for both policies, so rather than 24 visits, he qualifies for 48. However, first we’d have to figure out whether the additional deductible would be less than or equal to the amount covered by the secondary insurer.

If you can get free secondary coverage from your or your spouse’s employer, you should consider accepting during your next open enrollment period in case a major emergency arises, but be careful how you use it on a regular basis. Make sure that the coverage gap will cost more than the extra deductible before you submit that second claim.

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