Florida 2-15 Life, Health and Variable Annuity AgentFlorida Laws and Regulations Specific to Health InsuranceMedium
A Florida health insurance agent is explaining the coordination of benefits (COB) provision to a client who has coverage under two different group health plans. Which of the following statements accurately describes the primary purpose of the COB provision?
- ATo designate which policy is always responsible for paying 50% of the claim, regardless of other coverage.
- BTo prevent overinsurance by ensuring that total benefits from all policies do not exceed 100% of the actual medical expenses.
- CTo allow the insured to choose which policy will pay first for each claim.
- DTo allow insureds to receive benefits from both policies up to 100% of the covered expenses.
Show answer & explanationAnswer & explanation
Correct answer: B. To prevent overinsurance by ensuring that total benefits from all policies do not exceed 100% of the actual medical expenses.
The primary purpose of the Coordination of Benefits (COB) provision is to prevent overinsurance, ensuring that when an individual is covered by multiple health plans, the total amount paid by all plans does not exceed 100% of the actual medical expenses incurred.
Why the other options are wrong
- A. COB establishes a primary/secondary payer order, not a fixed percentage split for claims.
- C. The insured does not choose; COB rules dictate which policy pays primary and secondary.
- D. This is incorrect; COB aims to prevent payment beyond 100% of expenses.
Coordination of Benefits (COB)
A provision in group health insurance that prevents overinsurance by coordinating benefits from multiple plans so that the total payments do not exceed 100% of the allowable expenses.
- Prevents overinsurance
- Establishes primary/secondary payer rules
- Limits total reimbursement to actual expenses
Memory trick: COB: Coordinate Overlap, Balance Benefits, No Overpayment.