Coordination of Benefits (COB) With Other Plans and Medicare

Coordination of benefits (COB) is a way of determining the order in which benefits are paid and the amounts which are payable when you are covered under more than one health care plan or Medicare. Coordination of benefits determines which plan pays first, which plan pays second, and which plan pays third. It also ensures that the total payments from all plans do not exceed 100 percent of the total covered charge. All benefits of this plan are subject to coordination of benefits, except time loss benefits, life insurance, and accidental death and dismemberment benefits. These coordination of benefits provisions are subject to change as new rules and regulations are adopted and approved by the Board of Trustees.

Definitions Applicable to Coordination of Benefits

To understand coordination of benefits, it is important to know the meanings of the following two terms:

"Covered charges" as determined by this plan, means the medically necessary and "usual, customary and reasonable" charge for a service or supply covered by this plan and incurred while you are eligible under this plan. "Covered charges" do not include services or supplies that fall within the exclusionary provisions of this plan even if those services or supplies are recognized as "covered charges" under any of the other plans involved.

"Plan" means all of the following, even if they do not have their own coordination provisions:

• Group, individual or blanket disability insurance policies and health care service contractor and health maintenance organization agreements issued by insurers, health care service contractors and health maintenance organizations.
• Labor-management trustee plans, labor organization plans, employer organization plans, or employee benefit organization plans.
• Government programs which provide benefits for their own civilian employees or their dependents.
• Group coverage required or provided by any law including Medicare. This does not include workers' compensation.

Order of Benefit Payment

An important part of coordinating benefits is determining the order in which the plans provide benefits. The National Association of Insurance Commissioners (NAIC) Model Regulations provide guidelines to determine which plan is primary when an individual is covered under more than one health care plan. These guidelines include the "birthday rule" for natural children of married parents as well as rules for children of divorced or legally separated parents, rules for active versus inactive employees, state and federal continuation coverage such as COBRA, and the order of benefit determination to be followed when none of these rules are applicable.

As determined by federal law, Medicare has guidelines which determine when Medicare is the primary or secondary payer for an individual who has another health care plan and under what circumstances. This plan will follow Medicare guidelines.

Rules For Coordination of Benefits

When you are covered by two or more plans, the rules for determining the order of benefit payments are as follows:

1. The primary plan must pay or provide its benefits as if the secondary plan or plans did not exist.
2. A plan that does not contain a coordination of benefits provision that is consistent with this regulation is always primary. There is one exception: coverage that is obtained by virtue of membership in a group and designed to supplement a part of a basic package of benefits may provide that the supplementary coverage shall be excess to any other parts of the plan provided by the contract holder. Examples of these types of situations are major medical coverages that are superimposed over base plan hospital and surgical benefits, and insurance type coverages that are written in connection with a closed panel plan to provide outof- network benefits.
3. A plan may consider the benefits paid or provided by another plan only when it is secondary to that other plan.
4. Order of Benefit Determination The first of the following rules that describes which plan pays its benefits before another plan is the rule to use:

   1. Non-Dependent or Dependent

      The plan that covers the individual other than as a dependent, for example as an employee, member, subscriber, or retiree, is primary and the plan that covers the individual as a dependent is secondary. However, if the individual is a Medicare beneficiary, then, as a result of the provisions of Title XVIII of the Social Security Act and implementing regulations, Medicare is:

      1. Secondary to the plan covering the individual as a dependent; and
      2. Primary to the plan covering the individual as other than a dependent (e.g., a retired employee),

      then the order of benefits is reversed so that the plan covering the individual as an employee, member, subscriber, or retiree is secondary and the other plan is primary.

   2. Child Covered Under More Than One Plan

      Unless there is a court decree stating otherwise, plans covering a dependent child shall determine the order of benefits as follows:

      1. For a dependent child whose parents are married or are living together, whether or not they have ever been married:
         1. The plan of the parent whose birthday falls earlier in the calendar year is the primary plan;
         2. If both parents have the same birthday, the plan that has covered the parent longer is the primary plan.
      2. For a dependent child whose parents are divorced or separated or are not living together, whether or not they have ever been married:
         1. If a court decree states that one of the parents is responsible for the dependent child's health care expenses or health care coverage and the plan of the parent has actual knowledge of those terms, that plan is primary. This item shall not apply with respect to any claim determination period or plan year during which benefits are paid or provided before the entity has actual knowledge of the court decree provision;
         2. If a court decree states one parent is to assume primary financial responsibility for the dependent child but does not mention responsibility for health care expenses, the plan of the parent assuming financial responsibility is primary.
         3. If a court decree states that both parents are responsible for the dependent child's health care expenses or health care coverage, the provisions of subparagraph (a) of this paragraph shall determine the order of benefits;
         4. If a court decree states that the parents have joint custody without specifying that one parent has responsibility for the health care expenses or health care coverage of the dependent child, the provisions of subparagraph (a) of this paragraph shall determine the order of benefits; or
         5. If there is no court decree allocating responsibility for the child's health care expenses or health care coverage, the order of benefits for the dependent child are as follows:
            1. The plan covering the custodial parent;
            2. The plan covering the custodial parent's spouse;
            3. The plan covering the noncustodial parent; and then
            4. The plan covering the noncustodial parent's spouse.

   3. Active Employee or Inactive or Laid- Off Employee

      1. The plan that covers a person as an active employee that is, an employee who is neither laid off nor retired or as a dependent of an active employee is the primary plan. The plan covering that same person as a retired or laid-off employee or as a dependent of a retired or laid-off employee is the secondary plan.
      2. If the other plan does not have this rule and as a result, the plans do not agree on the order of benefits, this rule is ignored.

   4. COBRA Continuation Coverage

      If an individual whose coverage is provided under a right of continuation pursuant to federal or state law also is covered under another plan, the plan covering the individual as an employee, member, subscriber, or retiree (or as that individual's dependent) is primary and the continuation coverage is secondary.

      If the other plan does not have this rule, and if, as a result, the plans do not agree on the order of benefits, this rule is ignored.

   5. Longer or Shorter Length of Coverage

      The plan that covered the person as an employee, member, policyholder, subscriber or retiree longer is the primary plan and the plan that covered the person the shorter period of time is the secondary plan.

   6. If the preceding rules do not determine the order of benefits the allowable expenses must be shared equally between the plans meeting the definition of plan. In addition, this plan will not pay more than it would have paid had it been the primary plan.

These coordination of benefits guidelines are subject to change as new rules and regulations are adopted by Medicare, the State of Washington and the Board of Trustees.

Helpful Hint

The following guidelines may be helpful when coordinating benefits with government-sponsored plans:

• TRICARE is secondary to the Employee Health Plan.
• Veterans Administration (VA) is secondary to the Employee Health Plan when a veteran receives non-service related treatment at a VA facility.
• Medicaid is secondary to the Employee Health Plan.
• Indian Health Services is secondary to the Employee Health Plan.
• If an individual is a Medicare beneficiary as a result of endstage renal disease, Medicare is secondary to the Employee Health Plan for the first 30 months of Medicare.

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