What is dual health insurance?
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UPDATED: Mar 19, 2020
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- Dual coverage relates to an individual who is covered under two entirely different health insurance plans at the same time
- If a person has dual health insurance, one policy will serve as the primary with the other one takes the form of secondary coverage
- The policy that has been held the longest, thereby having the oldest birthdate, will become the primary plan.
- Primary and secondary plan designators can only be determined by the health insurance carrier. The employee or individual being covered cannot make that determination
With so many questions lingering over health insurance these days, many people are looking into the possibility of dual coverage just to make certain all of their bases are covered. it is important to go a bit more in-depth into each of the key principles in order to better understand the nature of primary and secondary policies.
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Why do people obtain dual health insurance?
Many policies today have high deductibles and maximum benefit limits. In order to better protect themselves against serious injury or illness, many people opt to retain two health insurance policies just to be on the safe side. This security blanket is often misunderstood, however, so it is important to weigh the pros and cons of maintaining two insurance policies as you begin to compare plans.
Many people with dual insurance coverage are young people who opt to remain on the parent’s policy, while also subscribing to the health insurance plan offered by their employer. Others might enter into a new job already having subscribed to an individual health insurance plan on their own, and they choose to keep that policy for a period of time while also joining up with the policy offered by their new employer.
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What Dual Health Insurance Actually Means
While roughly 16 percent of the American population still lacks adequate health insurance, more and more people seem to have two competing for health plans that they subscribe to at the same time. The two main categories of individuals that this affects are:
- Adult children who are still covered under a parent’s health insurance policy until the age of 26, but also working a job that grants them health insurance benefits.
- An individual employee might accept a health insurance plan offered by his or her employer, while also remaining on the policy offered under a spouse’s competing plan.
It is important to keep in mind that dual health insurance does not mean you will be reimbursed twice when visiting the doctor, nor does it mean that you will get prescriptions refilled twice instead of once at the pharmacy.
In fact, there are several downsides to dual health insurance coverage that many will want to take note of.
- When a person has dual coverage, it typically means that they are paying twice for roughly the same coverage and benefits
- Claims must be made with the primary health plan first before benefits from the secondary plan can even kick in. The secondary plan will cover items that the primary plan does not, but this does not include any deductibles.
- If both of the plans that are held have mandatory deductibles that must be made, both will have to be paid before covered benefits on either plan will kick in.
- The insured does not get to decide which health plan is the primary. This means that you will not be able to decide which policy will pay out first.
It is also important to note that dual health insurance coverage does not afford the insured the right to determine which insurer will actually pay out for a certain claim.
Determining the Primary and Secondary Plan
When a person has dual health insurance, it is important to know which plan will pay out benefits first. As a general rule, any plan gained through employment would be primary.
If a person were also covered under a parent’s plan, that policy would become the secondary. This goes for a spouse that is covered at work and under the plan of their husband or wife. The primary plan would be health insurance granted as a benefit at the workplace.
If there is still an unpaid balance after paying all necessary deductibles under the primary plan, the secondary plan will step in an pay. It will not, however, serve as a payment mechanism for the deductible carried in the terms of the primary plan. This is also referred to as a coordination of benefits.
Children, however, do have a special stipulation when carried dual coverage. This is referred to as the birthday rule. The parent who has a birthday first during the calendar year will be deemed the primary policy, with the other’s parent’s policy becoming secondary.
As you begin to compare policies, it is important to consider if you really need dual coverage. If it is convenient to have both plans, such as if you are already covered under a parent’s plan until you are 26 years of age anyway, then it might be beneficial.
If you must pay out of pocket a substantial amount of money for both policies, however, the exchange in benefits will almost certainly not be worth it. This is especially true if your primary plan contained a high deductible. By the time you had that covered, the secondary plan would pay out limited benefits anyway.
Remember that dual health insurance does not mean double benefits; you receive the same benefits under both policies.
The exception is that if a certain benefit is not covered under the primary plan, then the secondary plan may kick in and help you out. This is an obvious advantage, but you will want to weight the costs as you compare coverage of both policies and the decide which is best for you.
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