Health Plan Field Guide
Billing

Coordination of benefits

Last reviewed · Educational use only

When a person has two or more plans, one is primary and pays first as if it were the only plan. The secondary then considers what is left. Most plans follow the NAIC model order below.

Who pays first: commercial plans

  1. A plan with no COB provision is always primary.
  2. The plan covering the person as an employee or subscriber is primary over a plan covering them as a dependent.
  3. Active employee coverage is primary over COBRA, retiree or laid-off coverage.
  4. Dependent children of married or cohabiting parents: the birthday rule. The plan of the parent whose birthday (month and day, not year) falls earlier in the calendar year is primary. Same birthday: the plan that covered a parent longer.
  5. Children of divorced or separated parents: a court decree assigning health responsibility controls. Without one, the order is the custodial parent's plan, the custodial parent's spouse's plan, the non-custodial parent's plan, then the non-custodial parent's spouse's plan. Joint custody without a decree uses the birthday rule.
  6. Longer coverage wins if none of the above decides it.

Birthday rule check

Parent A's plan is primary for the children: March 14 comes before September 2 in the calendar year. The birth year does not matter. (Assumes both parents' plans cover the children as dependents and the parents are married or live together.)

Medicare and other coverage

SituationPrimarySecondary
65+, covered by own or spouse's current employment, employer has 20+ employeesGroup planMedicare
65+, employer has fewer than 20 employeesMedicareGroup plan
Under 65 with disability, current employment, employer has 100+ employeesGroup planMedicare
End-stage renal disease, group plan coverageGroup plan for the first 30 monthsMedicare, then primary after
Retiree coverage or COBRAMedicareRetiree plan / COBRA
Auto accident, workers' compensation, liabilityThat insurance, for related careMedicare (may pay conditionally)
Medicare and Medicaid (dual eligible)MedicareMedicaid (always last)

How the secondary pays

Plans use different methods, so the same claim can leave different balances:

MethodHow it worksSecondary pays*
Traditional (standard) COBPays up to what it would have paid as primary, but not more than the remaining balance.$120.00
Non-duplication / carve-outPays what it would have paid as primary minus what the primary paid.$0.00
Medicare secondary payer rulesPays the lowest of: its normal payment, the primary's allowed minus the primary's payment, or the provider's agreed amount minus the primary's payment.varies

*Example: $600 allowed, primary paid $480 (80%), patient balance $120. The secondary would have paid $480 as primary. Traditional COB pays the $120 balance; non-duplication pays $480 − $480 = $0.

Billing pros

Send the secondary claim with the primary's payment and adjustment data (837P loop 2320/2430, or the primary EOB attached on paper). An OA-23 adjustment on the secondary's remit reflects the primary's adjudication. CO-22 means the payer believes another plan is primary; ask the patient to update COB with each insurer, which they often have to do themselves.