Coordination of Benefits for a Child's Surgery
Maya and Jon both have employer-sponsored medical plans and cover their 12-year-old daughter under both. Maya's birthday is March 14; Jon's is July 9. Maya's plan has a $1,500 remaining family deductible, then 20% coinsurance, with a $6,000 out-of-pocket maximum. Jon's plan has a $1,000 deductible, then 30% coinsurance, with a $5,000 out-of-pocket maximum. The daughter has an appendectomy; the network-negotiated allowed amount is $16,000. Both plans use the same network and have non-duplication coordination-of-benefits provisions. Assume no other claims have been applied to either deductible this year and that the providers are in-network for both plans.
1. Which plan is primary, and how much will the secondary plan pay?
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Under the birthday rule, the plan of the parent whose birthday falls earlier in the calendar year is primary for a dependent child of married parents. Maya's birthday is March 14, earlier than Jon's July 9, so Maya's plan is primary.
Primary plan (Maya):
- Allowed amount: $16,000
- Remaining deductible: $1,500
- Remaining eligible: $14,500
- Primary pays 80%: $11,600
- Patient coinsurance: $2,900
Secondary plan (Jon), non-duplication:
- Its normal benefit as if primary: $16,000 − $1,000 deductible = $15,000; 70% × $15,000 = $10,500
- Secondary pays the lesser of its normal benefit minus the primary payment, or the remaining balance: $10,500 − $11,600 = negative, so $0
Patient responsibility: $1,500 + $2,900 = $4,400.
2. What if the parents were divorced and the custody decree made Jon responsible for medical expenses?
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In a divorce situation, the plan of the parent with custody or financial responsibility for medical expenses generally pays first, if the decree so states. That would make Jon's plan primary and Maya's plan secondary.
Jon primary:
- Allowed $16,000 − $1,000 deductible = $15,000
- Pays 70% = $10,500
- Patient balance before secondary = $1,000 + $4,500 = $5,500
Maya secondary, non-duplication:
- Normal benefit as primary = $16,000 − $1,500 = $14,500; 80% × $14,500 = $11,600
- Secondary pays $11,600 − $10,500 = $1,100
- Patient responsibility = $5,500 − $1,100 = $4,400