There are several reasons why coordination of benefits is important, including:  Ensure payment integrity: Health plans want to make sure they pay only the amount they are responsible for and do not make duplicate payments.   Establish who the primary and secondary health plan is: The primary health plan pays first, and the secondary health plan pays any remaining balance after the beneficiary share of the cost is deducted.  Prevent payment inaccuracies: Health plans want to know their financial responsibilities ahead of time which alleviates administrative headaches resulting from overpayment or other payment problems.    Coordination of benefits: This process is applied by individuals who have two or more existing policies to ensure that their beneficiaries do not receive more than the combined maximum payout for the plans. For example, a person could have healthcare coverage through their employer but also through their spouse and their spouse’s employer. Those health plans will have to work together to pay claims correctly. That process is called coordination of benefits (COB).    COB is complicated, and covers a wide variety of circumstances. This is only an outline of some of the most common ones. If your situation is not described, read your evidence of coverage or contact your state insurance.     Examples of how COB works: Example #1 Josie incurred medical expenses in the amount of $100. Both health plans considered the allowable expense to be $80 payable at 80%. Deductibles have been satisfied for both plans.   Coordination Total charge $100 Allowed amounts by both $80 Primary paid $64 (80% of $80) Secondary paid $16 (subtract $64 from $80) Patient responsibility $0 Posting payments Coordination Total billed charge $100 Primary payment $64 Secondary payment $16 Primary reduction $20 ($100 charge – $80 allowed) Secondary reduction Not taken, already zero balance Patient responsibility $0   Example #2 Thomas incurred medical expenses in the amount of $100. The primary plan allowed $80 payable at 80%. The secondary plan allowed $90 payable at 80%. Deductibles have been satisfied for both plans.   Coordination Total charge $100 Higher allowed expense $90 Primary paid $64 (80% of $80) Secondary benefit   Secondary paid $26 (subtract $64 from $90) Patient responsibility $0 Posting payments Coordination Total billed charge $100 Primary payment $64 Secondary payment $26 Primary reduction $10 (only take $10 of the $20 reduction to get to zero balance) Secondary reduction Not taken, already at zero balance Patient responsibility $0 There may be some patient responsibility depending on the type of coordination the member’s plan requires.   Continuation of coverage: This is essentially an extension of insurance coverage offered to individuals no longer covered under a particular plan; it most often applies to former employees and retirees of companies that offer employee coverage. COBRA benefits (see Group Coverage section below) qualify as continuation coverage. Referral: An official notice from a qualified physician to an insurer that recommends specialist treatment for a current policy-holder. Prior Authorization: A decision by your health insurer or plan that a health care service, treatment plan, prescription drug or durable medical equipment is medically necessary. Sometimes called prior authorization, prior approval or precertification. This does not guarantee that your insurance company will pay.