Is Using Two Health Insurance Companies Legal?
Many opportunities exist for individuals to have legally acquired dual health insurance coverage. For example, you might be offered a health insurance plan at work but still be covered by your parents insurance. Or, if you are married, you and you spouse might be eligible to be covered under each other's employer health insurance plan. While having policies from two companies is legal, rules and regulations apply to the how you access those benefits. The insurance company, sponsoring employer and policyholder must meet their responsibilities, some of which are included in the insurance policies and others that are required by government agencies.
Whether you are free to have dual coverage under two plans depends on the rules of the health insurance plans for which you are eligible. Your employer’s health insurance plan might prohibit coverage under a different plan during the same coverage period. Some employer plans won’t cover dependents, such as spouses and children, who are eligible for coverage under other plans that meet certain criteria. Plans that don’t allow dual coverage may deem your coverage null and void if you have coverage under another health insurance policy. Plans that allow dual coverage require coordination of benefits to ensure proper claim payment.
Coordination of Benefits
When you have dual coverage, one of your health insurance plans is the primary plan, while the other is secondary. Coordination of benefits means the primary plan pays claims first, with all or a portion of the remaining costs paid by the secondary plan. Coordination of benefits helps you get the maximum financial benefit from the health insurance coverage. Your secondary plan pays costs that would ordinarily be out-of-pocket costs for you. The coordination also helps the insurance companies avoid overpayment of claims. Even with two health insurance plans, the amount paid for your claims won’t exceed 100 percent of the amount charged by the medical provider. Neither health insurance company will pay for expenses not covered under its plan.
Special Coordination Rules
Special rules exist for coordination of benefits when Medicare is one of the health insurance plans. Although 65 is the usual age for Medicare eligibility, young people with end-stage renal disease or certain disabilities are eligible regardless of age. Whether Medicare is primary depends on the age and disability status of the covered individual and, if coverage is through current employment, the number of employees covered under the plan. Appropriate coordination of benefits requires you to notify medical providers and insurance companies about all of your health insurance coverage. Special rules also apply to dependent children covered under two plans, such as coverage under both parents’ employment-based plans. For instance, the birthday rule determines the primary plan when the parents living together. Physical custody or a court order determines primary plan when the parents live apart.
The legality and legitimacy of your dual coverage depends on you and your health insurance companies honoring the terms of your policy. Insurance companies require policyholders to notify them of changes in coverage, such as the addition of coverage under a second plan. The company might require you to submit a coordination of benefits form to report the coverage and provide the name and contact information for the second plan. Check with your health insurance providers and employer for rules about dual coverage and the coordination of benefits.
- Arizona Center for Disability Law: Managing Dual Insurance Coverage
- Blue Cross Blue Shield of Texas: What is Coordination of Benefits?
- Medicare: Coordination of Benefits
- Excellus Blue Cross Blue Shield: Coordination of Benefits
- Medicare.gov: Medicare Enrollment Tool - General Enrollment and Eligibility
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