Coordination of benefits means two or more benefit plans working together on the same claim, so that the combined payment covers more of the cost than either plan would pay on its own. If you and your spouse each have coverage through work, coordinating properly can bring your reimbursement up to 100% of the eligible expense instead of the 80% or so a single plan might pay.
It is one of the most valuable features of a group benefit plan and one of the least used, mostly because people do not know the order in which to submit claims.
Here is how it works in Canada, which plan pays first in each situation, and where the rules have caught people out.
What is coordination of benefits?
Coordination of benefits, usually shortened to COB, is the process insurers follow when someone is eligible to claim the same expense under more than one health or dental plan. One plan is the primary payer and pays first. The other is the secondary payer and considers what is left over.
In Canada, the sequence is not left to the insurers to argue about. The Canadian Life and Health Insurance Association (CLHIA) publishes Guideline G4, which sets out the order in which group plans pay and the minimum each is expected to contribute. Because carriers across the industry follow it, the process is broadly consistent whether your coverage is with Sun Life, Manulife, Canada Life, Alberta Blue Cross or anyone else.
The guideline also sets the ceiling: the combined payment from all group plans for a given item cannot exceed 100% of the eligible expense. Coordination is designed to close your out-of-pocket gap, not to turn a claim into a profit.
What does coordination of benefits mean in practice?
It means an extra step at claim time, and money back for taking it.
Say a $200 dental cleaning is eligible under both your plan and your spouse’s. Your plan reimburses at 80%, so it pays $160 and leaves $40 unpaid. Under coordination, you submit that remaining $40 to the second plan, which considers it under its own terms and may pay all or part of it. Same expense, same two plans you already have, roughly $40 recovered instead of absorbed.
Two things determine whether that works. First, submitting to the plans in the right order. Second, giving the second plan the first plan’s statement, since it cannot assess the remainder without knowing what was already paid.
Who can coordinate benefits?
Coordination applies whenever the same person is covered under more than one plan. The common situations:
- You are covered by your own employer’s plan and are also a dependent on your spouse’s plan.
- Your dependent children are covered under both parents’ plans.
- You work two jobs and both provide group benefits.
- You have a group plan and an individual health or dental policy you purchased yourself.
If you only have one plan, the coordination provisions in your booklet simply do not come into play. Your insurer may still ask you periodically to confirm whether other coverage exists.
In all cases where benefits are being coordinated, the insurer will apply any deductibles, maximums or coverage limitations in accordance with the policy before payments issued.
COB is when a plan member with family coverage has a spouse with family coverage under their benefit plan as well. Industry-wide guidelines developed by the Canadian Life and Health Insurance Association (CLHIA) establish a consistent handling process for all insurance companies to follow when processing health and dental claims.
Consistent handling process
The long and short of the coverage rules are if the claim is for the plan member, the claim is submitted first through their plan and second through the spouses plan. The opposite is true for the spouse—a claim would be submitted first through their plan and second through the plan member’s benefits. When both parents have benefits, the CLHIA guidelines suggests claims for eligible dependents flow through the parent whose date of birth falls earlier in the calendar year.
In most cases, even in the event of a divorce or separation, the same dependent child rules apply.
Claims for you and your spouse
For coordination of benefits to work properly, you need to understand which insurance company you should submit claims for you and your spouse to first.
If your spouse’s insurance plan happens to be with the same carrier, perhaps even the same company, the same rules apply. You and your spouse must refer to each other’s policy number when submitting claims, so the insurance carrier can coordinate benefits available for each plan automatically.
When COB is utilized, you make the most of coverage available through your benefit plan.
Disclaimer: Please note that the information provided, while authoritative, is not guaranteed for accuracy and legality. The site is read by a world-wide audience and employment, taxation, legal vary accordingly. Please seek legal, accounting and human resources counsel from qualified professionals to make certain your legal/accounting/compliance interpretation and decisions are correct for your location. This information is for guidance, ideas, and assistance.
