Florida 2-20 General Lines Agent (Property, Casualty, Commercial Lines and Florida Law)Health InsuranceHard
A Florida business owner provides group health insurance to their employees. The policy includes a Coordination of Benefits (COB) provision. What is the primary purpose of a COB provision in a group health insurance policy?
- ATo prevent an insured from collecting more than 100% of actual medical expenses when covered by two or more policies.
- BTo allow employees to choose between multiple insurance carriers.
- CTo ensure that all employees receive identical benefits regardless of their individual needs.
- DTo determine which policy is primary when an employee has both health and disability insurance.
Show answer & explanationAnswer & explanation
Correct answer: A. To prevent an insured from collecting more than 100% of actual medical expenses when covered by two or more policies.
The primary purpose of a Coordination of Benefits (COB) provision is to prevent overinsurance by ensuring that when an individual is covered by two or more group health plans, the total benefits paid do not exceed 100% of the actual medical expenses.
Why the other options are wrong
- B. This relates to plan choice, not the coordination of benefits between multiple plans covering the same claim.
- C. This relates to uniformity of benefits within a single plan, not the coordination between different plans.
- D. COB applies to multiple health insurance policies, not typically between health and disability, which serve different purposes.
Coordination of Benefits (COB)
A provision in group health insurance policies that determines the order in which two or more plans pay benefits when an individual is covered by multiple policies, preventing overinsurance.
- Prevents individuals from collecting more than 100% of expenses.
- Determines which plan is 'primary' and 'secondary'.
- Applies when an insured has multiple group health coverages.
- Follows specific rules (e.g., birthday rule for children).
Memory trick: COB: Coordinate benefits, don't over-insure, it's the right procedure!