Two Plans, One Child: Who Pays First?
Ana, age 9, is covered as a dependent under two health plans. Her parents divorced two years ago, and the decree says nothing about health coverage. Ana lives with her mother, Lucia, whose HMO covers Ana with a $750 deductible and then 60% of the allowed amount, in-network only. Her father, Ray, carries a PPO through his employer with a $1,000 deductible and then 70%, and the PPO contains a non-duplication coordination-of-benefits provision. Ana needs $6,000 of in-network covered care (allowed amount). Lucia's plan has covered Ana longer; Ray's plan was established first. Ray insists his plan should be primary because 'I pay more for it.' Lucia asks you how the bills will be divided and whether the provider can bill her for the remainder.
1. Determine the order of benefits and explain your reasoning.
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Order of benefits determination:
- Custodial-parent rule first. Because the parents are divorced or separated and the decree does not address coverage, the plan of the parent with custody (Lucia's HMO) pays first, the plan of the non-custodial parent (Ray's PPO) pays second, and a stepparent's plan, if any, would follow. A decree that made Ray responsible for Ana's medical expenses would change this, so the decree itself must be read.
- Why Ray's arguments fail. 'I pay more' is not a COB criterion. Neither is 'my plan was established first' unless the plans are on the same level of the custodial-parent rule, which they are not. The 'longer coverage' fact is also irrelevant here; the active-employee/longer-coverage tiebreakers apply only after the custodial rule is exhausted.
- Practical step: both plans must be given the other's information, and the provider should bill the primary first and submit the explanation of benefits to the secondary. Lucia should not pay a bill before the secondary has processed the claim.
2. Calculate what each plan pays and what Lucia owes, and explain the effect of the non-duplication provision.
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Primary - Lucia's HMO:
- $6,000 − $750 deductible = $5,250
- 60% of $5,250 = $3,150 paid
- Balance after primary: $2,850
Secondary - Ray's PPO, with a non-duplication provision:
- What the PPO would have paid as primary: $6,000 − $1,000 = $5,000 × 70% = $3,500
- Non-duplication pays the lesser of (a) the remaining balance of $2,850 or (b) what it would have paid as primary minus what the primary actually paid: $3,500 − $3,150 = $350
- The lesser amount is $350 paid
Patient responsibility: $6,000 − $3,150 − $350 = $2,500
Why this matters: if Ray's PPO had a traditional (full) coordination provision, it would have paid the entire $2,850 balance and Ana's out-of-pocket would have been $0. Non-duplication limits the secondary plan's contribution to what it would have paid on its own, which leaves the family with the difference between the two plans' benefit levels. The patient cost is driven by benefit design and the COB clause, not by which parent 'pays more.'
3. What may the in-network provider bill Lucia for, and how does preventive care change the analysis?
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What the provider may bill:
- Deductibles, coinsurance, and copays, plus any non-covered services disclosed in advance. The provider cannot balance-bill the difference between its charge and the allowed amount for in-network covered services, but it can collect the $2,500 patient responsibility computed above.
- The provider must bill the primary plan first, then the secondary, before pursuing the patient for the balance.
Preventive care: in-network preventive services required under the ACA must be covered without cost sharing. If any of the $6,000 was a preventive service, that portion bypasses the deductible and coinsurance entirely on the primary plan, reducing the patient's $2,500. The claim should be itemized to separate preventive from diagnostic and treatment services.
Practical advice to Lucia: keep both plans informed, never waive the secondary, and if Ray's plan denies the claim, ask for the specific COB provision in writing; a plan that pays second is entitled to the primary's EOB but cannot refuse to process solely because the parents are divorced.