When a client has more than one insurance plan, it’s essential to understand how coordination of benefits (COB) works to determine which insurance pays first. This process can get confusing, but understanding the roles of primary and secondary insurance helps ensure smooth billing and maximum coverage for your clients.

What Is Primary Insurance?

Primary insurance is the plan that pays first for a claim. This plan is usually determined based on factors like employment status, policyholder age, or which plan was established first. The primary insurance covers as much as possible of the allowed charges, and any remaining balance can then be sent to the secondary payer.

What Is Secondary Insurance?

Secondary insurance kicks in after the primary insurance has processed the claim. It helps cover costs that the primary insurance didn’t pay, like deductibles, copayments, or coinsurance. The secondary insurance won’t pay anything until the primary insurance has processed the claim and provided an Explanation of Benefits (EOB), outlining what they paid and what remains.

How Is Primary and Secondary Determined?

Determining which plan is primary usually follows certain rules:

• Employer Plan: If the client has an employer-sponsored plan, that is typically considered the primary insurance.

• Dependent Coverage: If a client is covered as a dependent on two plans (such as a spouse’s plan and their own employer plan), the plan that covers them as an employee is usually primary.

• Birthday Rule: For children covered by both parents’ plans, the primary insurance is often determined by the “birthday rule”—the parent whose birthday falls earlier in the year has the primary plan.

How Does Billing Work with Two Insurances?

When submitting claims, the provider must first bill the primary insurance. Once that insurance processes the claim and provides the EOB, you can then bill the secondary insurance for any remaining balance. The secondary insurer requires the EOB from the primary insurer to know what has already been paid and what they’re responsible for.

Common Issues with Dual Insurance

Sometimes clients forget to inform their provider that they have two insurance plans, leading to billing issues or denials. It’s important to ask clients upfront if they have additional coverage, and to update your billing information regularly to avoid coordination of benefits (COB) problems.

At Clear Path Billing Solutions, we make mental health billing simple and efficient. From timely claims submission to handling denials, we take care of the details so you can focus on your clients. Let us streamline your billing process and improve your cash flow. Book your free consultation today!