COORDINATION OF BENEFITS (COB)
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Rules that decide which insurer pays first when you have coverage under more than one plan.
Summary
Coordination of Benefits (COB) is a set of rules used by insurance companies to determine the order of payment when a person is covered by multiple insurance plans. This prevents duplicate payments and ensures claims are processed efficiently. The primary insurer pays first up to their coverage limits, then the secondary insurer may cover remaining eligible expenses. COB rules typically follow a hierarchy: employer-sponsored plans usually take precedence over individual plans, and the plan covering you as an employee takes priority over plans covering you as a dependent.
Usage Context
Understanding COB is crucial when studying health insurance claims processing, family coverage decisions, employee benefits administration, and healthcare cost management strategies.
Common Confusions
- Thinking you can collect full benefits from multiple insurers for the same claim
- Assuming the more expensive plan is automatically primary
- Believing COB always results in 100% coverage of medical expenses
- Confusing COB with supplemental insurance policies
- Not understanding that COB can sometimes result in higher out-of-pocket costs
