Coordination of Benefits (COB)

Note: This article is for HR Admins. If you're not an HR Admin and want to understand how Coordination of Benefits (COB) works with your plan, check out this article.

What is Coordination of Benefits?

Coordination of benefits (COB) is when two insurance plans work together to pay claims for the same person. This occurs when an employee or their dependents are covered for benefits under more than one insurance plan.

If an employee or their dependents are covered by their own plan and their partner's plan, the two insurance carriers work together to pay claims. Any health, drug, and dental claims are "coordinated" between the two carriers. The reimbursement amount is usually higher, because any amount the first plan doesn't cover is then paid by the second plan.

Note: This assumes the claim is eligible under both plans. There is no circumstance where an employee is reimbursed for more than 100% of the total claim amount.

League’s process

During the enrollment experience, employees provide COB information when they add a dependent.

The order of benefit payment

Carriers have a standard order for how benefit payments are coordinated between the benefits plans. The order applies to your employees and their partners and children. For each insured individual, claims are processed by:

The 1st (primary) payor
The 2nd (secondary) payor
The spending account of the 1st payor (if applicable)

At each step, only the unpaid claim amount from the previous payor is processed. This ensures no more than 100% of the eligible claim amount is reimbursed to the employee.

The employee, partner, and dependent(s) have different 1st and 2nd payors.

Employee payors

If an employee has coverage under their own insurance plan and under their partner’s plan:

The primary payor is always the employee's own insurance plan;
The secondary payor is the partner’s insurance plan, if the employee is enrolled as a dependent;
The third payor is the employee's spending account, if applicable.

Partner payors

If an employee's partner is covered under their own insurance plan and under the employee's plan:

The primary payor is always the partner's insurance plan;
The secondary payor is the employee's insurance plan, if their partner is enrolled as a dependent.

Child dependent payors

If an employee's child dependents have coverage under both the employee and partner’s benefits plans:

The primary payor is the insurance plan of the parent with the earliest birthday in the calendar year (not the earliest birth year);
The secondary payor is the insurance plan of the parent with the latest birthday in the calendar year.

If both parents have the same birth date, the plan of the parent whose first name begins with the earlier letter in the alphabet pays benefits first. We didn't make that up, we promise!

However, in situations where the parents of the dependent child are separated or divorced, the following order applies:

The primary payor is the plan of the parent with custody of the child;
The secondary payor is the plan of the partner of the parent with custody of the child;
The third payor is the plan of the parent who doesn't have custody of the child;
The final payor is the plan of the partner of the parent who doesn't have custody of the child.

If parents share joint custody, benefits are first paid by the plan of the parent with the earlier birth date (month/day) in the calendar year. If both parents have the same birth date, the plan of the parent whose first name begins with the earlier letter in the alphabet pays benefits first.