Definition
Duplication of Benefits is a situation in health insurance where an individual is covered by two or more policies for the same insured loss. In these instances, each policy pays its proportionate share of the loss, or one policy acts as the primary coverage while the other serves as secondary coverage.
This ensures that the insured party does not receive overlapping benefits that exceed the actual loss incurred.
Examples
Scenario 1: Employer and Private Insurance
- An individual might have health insurance through their employer and an additional private health insurance policy. In the case of a medical claim, the employer’s insurance could act as the primary policy, while the private insurance becomes secondary, covering costs not covered by the primary policy.
Scenario 2: Coordination of Benefits
- A married couple may both have their own health insurance plans that cover each other as dependents. In case of a medical expense, the insurer of the person receiving treatment becomes the primary policy, and the other spouse’s policy will provide secondary coverage.
Frequently Asked Questions (FAQs)
1. What determines which policy is primary and which is secondary?
The coordination of benefits rules typically determine the order. The policyholder’s own insurance usually serves as primary, while any dependent coverage or additional policies usually serve as secondary.
2. Can I receive full reimbursement from both policies?
No, duplication of benefits means that policies will coordinate to ensure the total benefit does not exceed the actual incurred expenses. Usually, the primary policy pays first and the secondary policy covers remaining eligible costs.
3. What if both policies claim to be primary?
If both insurance companies claim to be primary, you will need to refer to the coordination of benefits section in each policy. This usually involves resolving the issue with both insurers to determine the correct order of responsibility.
4. Are there cases where duplication of benefits is not allowed?
Yes, there are specific insurance policies and situations where duplication of benefits is excluded, mainly to prevent over-insurance and fraudulent claims.
5. How does duplication of benefits affect deductibles?
The primary policy might require the insured to satisfy its deductible first. The secondary policy can then cover some or all of the out-of-pocket costs remaining after the primary policy’s benefits have been utilized.
Related Terms
Coordination of Benefits (COB)
- A provision used to determine the order of payments and ensure that the combined payment from all policies does not exceed the total allowable medical expenses.
Primary Coverage
- The insurance policy that provides the initial response and payment for a claim.
Secondary Coverage
- The insurance policy that provides additional coverage after the primary policy has paid its share.
Online References
Suggested Books for Further Studies
- Health Insurance and Managed Care: What They Are and How They Work by Peter R. Kongstvedt
- Insurance Handbook for the Medical Office by Marilyn Fordney
- Essentials of Managed Health Care by Peter Reid Kongstvedt
Fundamentals of Duplication of Benefits: Insurance Basics Quiz
By understanding duplication of benefits in health insurance, policyholders can maximize their coverage effectively while ensuring claims are properly coordinated between multiple policies.