Coordination of Benefits for a Dependent Child
Two covered parents, Dana and Luis, are divorced. Their 9-year-old daughter Maya is covered as a dependent under both parents' group health plans. Dana's plan uses the traditional birthday rule; Luis's plan uses the same rule. Dana's birthday is April 12; Luis's is September 30. The divorce decree, entered two years ago, states that Luis is responsible for Maya's medical expenses and that his plan "shall be primary." Maya needs a $14,000 outpatient procedure. Dana's plan has a $1,000 deductible and 20% coinsurance; Luis's plan has a $500 deductible and 10% coinsurance. Both plans have coordination-of-benefits provisions.
1. Determine which plan is primary and explain how the decree interacts with the COB rules.
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Under standard COB rules for a dependent child of divorced or separated parents, the plan of the parent with custody is primary, the plan of the noncustodial parent is secondary, and the plan of a stepparent (if any) is last. The birthday rule is a fallback used when both parents have custody or when the parents are married to each other. Here the decree names Luis as financially responsible, but a divorce decree does not bind the group health plans; the plans apply their own COB provisions. If Dana has physical custody, Dana's plan is primary under the custodial-parent rule, and Luis's plan is secondary, notwithstanding the decree's 'shall be primary' language. If the plans' documents incorporate a qualified medical child support order (QMCSO), the order can alter which plan pays first, so the analyst must check whether the decree was qualified as a QMCSO. Absent a QMCSO, the custodial-parent rule controls. The analyst should confirm custody and QMCSO status before processing the claim.
2. Assuming Dana's plan is primary, compute the approximate total out-of-pocket cost to the family for the $14,000 procedure, ignoring any secondary-plan carve-outs.
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Primary plan (Dana): deductible $1,000, leaving $13,000. Coinsurance 20% of $13,000 = $2,600. Primary pays $10,400; family pays $3,600 to the primary. Secondary plan (Luis): it considers the amount the primary paid and the remaining balance. The secondary plan typically pays the lesser of (a) the remaining balance after primary payment or (b) what it would have paid as primary minus what the primary paid. As if primary: $14,000 − $500 deductible = $13,500 × 90% = $12,150. Since the primary paid $10,400, the secondary pays the difference up to $12,150 − $10,400 = $1,750. Total paid by plans = $12,150; family out-of-pocket = $1,850 (the $500 deductible plus the 10% coinsurance on the secondary calculation). Actual figures depend on the secondary plan's nonduplication method, so the analyst should verify the plan's COB methodology (traditional vs. nonduplication) before finalizing.