What is Coordination of Benefits (Health Care) and Why It Matters
Definition & meaning
Coordination of benefits refers to the process used to determine the financial responsibilities of two or more health insurance plans when an individual is covered by multiple policies. This process ensures that the total benefits paid do not exceed the total cost of the medical claim. It is also known as crossover, as it involves the interaction between different insurance plans to manage coverage effectively.
Legal use & context
This term is primarily used in the context of health care and insurance law. It is relevant for individuals who hold multiple health insurance policies, such as through an employer and a spouse. Understanding coordination of benefits is essential for navigating claims, ensuring that users receive the maximum benefits available without overpayment. Users can manage this process using legal templates from US Legal Forms, which can help them understand their rights and obligations.
Real-world examples
Here are a couple of examples of abatement:
Example 1: A person has health insurance through their employer and also through their spouse's employer. When they incur medical expenses, the primary plan pays first, followed by the secondary plan, ensuring that the total paid does not exceed the cost of the care received.
Example 2: A child is covered under both parents' health insurance plans. In this case, the plan of the parent whose birthday comes first in the calendar year is typically considered the primary plan for coordination of benefits. (hypothetical example)