What is the Coordination-of-Benefits Clause and Why It Matters
Definition & Meaning
A coordination-of-benefits clause is a provision found in insurance contracts. It ensures that the total amount paid for medical and hospital care does not exceed the total benefits available from all insurance sources. When a person is covered by more than one health insurance plan, the benefits from all plans are limited to 100% of the actual medical charges incurred, after any deductibles have been met. This clause is particularly relevant for families with two working adults, as it helps manage costs and prevents individuals from receiving more coverage than their medical expenses.
Legal Use & context
Coordination-of-benefits clauses are commonly used in the context of health insurance and employee benefits law. They are designed to clarify how benefits are distributed when multiple insurance plans are involved. This term is relevant in civil law, particularly in health care and insurance disputes. Users can manage situations involving these clauses by utilizing legal forms and templates provided by services like US Legal Forms, which can help in drafting or understanding the implications of such clauses.
Real-world examples
Here are a couple of examples of abatement:
Example 1: A person has two health insurance plans: Plan A and Plan B. If their total medical expenses amount to $1,000 and they have a $200 deductible for each plan, after meeting the deductibles, the total benefits from both plans will cover the $1,000, but not exceed it.
Example 2: A family with two working parents both covered by separate employer health plans may find that the coordination-of-benefits clause limits their total reimbursement to the actual medical costs incurred, preventing them from receiving double payments for the same expenses. (hypothetical example)