Whose benefit plan pays first and why

Marriage often means two benefit plans. So how do you know where to submit your claims and who is responsible for paying them?

A guideline to the coordination of benefits has been prepared by the Canadian Life and Health Insurance Association to establish a consistent set of rules for insurance companies processing claims made to more than one medical or dental plan.

If you have coverage with your employer’s plan, you must submit to your own plan first and your insurer must pay the claim, subject to any deductibles or maximums. If there is a balance owing, the bill can then be re-submitted to your spouse’s insurance carrier.

When both parents have plans and their children are covered under both, the plan of the parent with the earlier birth date pays first. Should both parents have the same birth date, the plan paying first is based on the parent’s given name that occurs first in the alphabet.

In the case of a divorce where one parent has sole custody, the custodial parent’s plan is first payer. Where the custodial parent has a new spouse, the new spouse’s plan is next on the list. Finally, if there is any unpaid balance or gap in coverage, the plan of the parent without custody is responsible.

If university or college students have some form of health coverage through their school or part-time job, these plans will always pay before any plan where the student is covered as a dependant.

The plan that pays first will calculate benefits as though the duplicate coverage does not exist. In other words, it will process the claim as it would any other claim.The plan that pays second calculates benefits for each individual item on the claim based on the lowest of:

•   The amount that would have been payable had it been the first plan; or
•   100% of the eligible expenses minus the benefits paid by the first plan.

You can’t collect more than 100% of your eligible medical or dental expenses and in some cases the combined payments from all the plans may still be less than your actual out-of-pocket expenses.

If you have drug cards from two plans and purchase prescription drugs, the coordination of benefits will take place electronically at the point of sale. As a result, you will not have to send paper claims first to one company and then to another. Should the employers of both spouses be insured with the same company, some insurance company may coordinate benefits based on a single claim, rather than requiring the employee to resubmit.