Florida 2-15 Life, Health and Variable Annuity AgentGeneral Knowledge of Health InsuranceEasy
A client is reviewing their existing group health insurance policy and notices a Coordination of Benefits (COB) provision. What is the primary purpose of this provision?
- ATo coordinate benefits between health insurance and disability income policies.
- BTo allow the client to choose which of their multiple policies will pay first.
- CTo ensure that individual health plans are always secondary to group health plans.
- DTo prevent an insured from receiving more than 100% of covered expenses when covered by two or more group plans.
Show answer & explanationAnswer & explanation
Correct answer: D. To prevent an insured from receiving more than 100% of covered expenses when covered by two or more group plans.
The Coordination of Benefits (COB) provision is designed to prevent overinsurance when an individual is covered by multiple group health insurance plans, ensuring total payments do not exceed 100% of the actual medical expenses.
Why the other options are wrong
- A. COB applies to multiple health plans, not typically across different types of insurance like health and disability.
- B. The COB rules dictate the order of payment, not the client's choice.
- C. COB rules establish primary/secondary status, but it's not always group over individual.
Coordination of Benefits (COB)
A provision in group health insurance policies that prevents overinsurance by determining which plan is primary and which is secondary when an individual is covered by more than one group plan.
- Avoids duplicate payments.
- Ensures total benefits do not exceed 100% of expenses.
- Establishes primary and secondary payer rules.
Memory trick: Coordination: two plans, one bill, no overpayment.