Coordination of Benefits for a Divorced Family
A 10-year-old child is covered under two group health plans. The parents are divorced. The divorce decree says the father must provide coverage and that the mother's plan is secondary. Father's birthday is March 2; mother's is July 14. Father's plan is an HMO; mother's is a PPO. The child sees an out-of-network specialist. Total bill is $12,000. Father's HMO denies the claim as out-of-network. Mother's PPO has a $1,000 deductible and pays 70% of allowed charges; allowed charges are $9,000. The parents ask which plan is primary and who pays what.
1. Determine primary versus secondary under coordination of benefits and explain the role of the divorce decree.
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Coordination-of-benefits rules are set by the plan documents, not by the parents' divorce decree. The decree can allocate responsibility between the parents, but it does not bind the insurers.
For a dependent child covered by both parents' plans, the common COB rules are:
- If a court decree specifies which parent's plan is primary, the plans may follow it, but only if the plan documents adopt that rule.
- Otherwise, many plans use the birthday rule: the plan of the parent whose birthday falls earlier in the year is primary.
Here, the father's birthday is March 2 and the mother's is July 14. If the plans use the birthday rule, the father's HMO is primary. The mother's PPO would be secondary. The divorce decree saying the mother's plan is secondary is consistent with that result, but the plan documents control.
2. Calculate the likely payment if the father's HMO pays nothing and the mother's PPO is secondary.
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The father's HMO denies because the specialist is out-of-network, so it pays $0. The mother's PPO then considers the claim as secondary.
On allowed charges of $9,000:
- Deductible: $1,000
- Remaining allowed charges: $8,000
- PPO pays 70% of $8,000 = $5,600
- Patient responsibility from the PPO calculation: $1,000 deductible + $2,400 coinsurance = $3,400
But because the PPO is secondary, it may pay only the difference between what it would have paid as primary and what the primary actually paid. Since the primary paid nothing, the secondary may pay the $5,600, subject to its secondary-payer rules. The patient may also face balance billing for amounts above the PPO's allowed charge. The parents should not assume the PPO will pay the full $12,000.
3. The plans disagree about primary status and the parents want to rely on the decree. What should they do?
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They should not rely only on the decree. They should:
- Request each plan's COB provision in writing.
- Ask each plan administrator to state its primary/secondary determination.
- Submit the claim to both plans with the other plan's explanation of benefits.
- If the plans disagree, follow each plan's appeal process and ask the plan administrators to coordinate directly.
- Keep the decree available because it may affect which parent ultimately bears the unpaid balance between them.
The decree can settle financial responsibility between the parents, but it cannot force an insurer to ignore its own COB rules. The practical answer is to get written determinations from both plans before paying the bill.