Coordination of Benefits (COB) is the set of rules that decides how two or more health plans pay when a person is covered by more than one. It prevents you from collecting more than 100% of your actual medical costs across all your plans—keeping insurance in line with the principle of indemnity. COB sorts out which plan pays first (primary) and which pays second (secondary).

Why it matters

People are sometimes covered by two plans—say, their own employer's plan and a spouse's plan. Without COB, they could submit the same bill to both and profit from being sick or injured. COB ensures the plans coordinate so the total paid doesn't exceed the actual expense, while still helping cover what the primary plan didn't.

Primary vs. secondary

• The primary plan pays first, as if it were the only coverage.
• The secondary plan then may pay some or all of the remaining eligible costs, up to its own limits.

Determining which is primary follows established COB rules. A common example is the birthday rule for children covered by both parents: the plan of the parent whose birthday falls earlier in the calendar year is usually primary.

A simple example

A child is covered under both parents' health plans and visits the doctor. The parent whose birthday comes first in the year has the primary plan, which pays first. The other parent's plan acts as secondary, potentially picking up remaining eligible costs—but the combined payments won't exceed the actual bill.

Don't confuse it with…

• COB is not double coverage that pays twice—that's exactly what it prevents.
• It's different from subrogation, which recovers money from an at-fault third party; COB coordinates among the insured's own health plans.
• The birthday rule is just one ordering rule, used mainly for dependent children.

On the exam

Remember COB stops payments from exceeding 100% of the loss, and know primary pays first, secondary pays the remainder. Be ready for the birthday rule for children. Tie COB back to the principle of indemnity—no profiting from a claim.