OTHER HEALTH CONCEPTS · 5 MIN READ

Coordination of Benefits and Medicare Secondary Payer

When one person is covered by two or more health plans, coordination of benefits (COB) rules decide which plan pays first so that combined payments never exceed the actual loss — preventing profit from duplicate coverage. The NAIC Coordination of Benefits Model Regulation supplies the order-of-determination rules most insurers follow. A plan covering the person as an employee pays before a plan covering the person as a dependent. For a dependent child covered under both non-divorced parents' plans, the Birthday Rule controls: the plan of the parent whose birthday — month and day only, ignoring the year — falls earlier in the calendar year is primary. If the parents share a birthday, the plan that has covered its parent longer pays first. The Birthday Rule replaced the old gender rule, which had automatically made the father's plan primary. For children of divorced or separated parents, the custodial parent's plan generally pays first unless a court order says otherwise. Self-funded ERISA plans are not bound by the NAIC model but most adopt it. A parallel federal regime — the Medicare Secondary Payer (MSP) statute — decides when an employer group health plan must pay before Medicare. There are three tested categories. Working aged: for an actively employed beneficiary 65 or older, the group plan is primary if the employer has 20 or more employees; under 20, Medicare is primary. Disability: for an under-65 Medicare beneficiary with employer coverage, the group plan is primary only if the employer has 100 or more employees. ESRD: when Medicare entitlement rests solely on End-Stage Renal Disease, the group plan pays primary for a 30-month coordination period regardless of employer size, after which Medicare becomes primary. Plans that dodge their primary obligation face government recovery actions with double damages, and workers compensation settlements must protect Medicare's interests through set-aside arrangements. Understanding who pays also means understanding how providers are paid. Fee-for-service reimburses each service separately and rewards volume. Capitation pays a fixed per-member-per-month amount regardless of services delivered, shifting utilization risk to the provider — encouraging efficiency but creating a countervailing risk of underservice, which is why managed-care contracts pair capitation with network adequacy and quality standards.