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FILE 40: Coordination of Benefits

Amita Saenz suffers from a variety of skin ailments that require numerous

prescriptions. Each month, she files her prescription receipts, together with the

necessary paperwork, with her employer to forward to their group plan insurer.

She has an extended health plan with a $25 annual deductible and a co-insurance

factor that pays 80%. Her husbands plan has a $100 annual deductible and no co-

insurance factor. Here is what she is reimbursed for over the first three months of

the year: January: Receipts $185.00 Amitas plan $185 submitted $25 deductible 80% x ($185-$25) co-insurance $128 paid Husbands plan $185 submitted $100. deductible $85 could be paid, but since $128 was already paid under Amitas plan, her husbands plan will pay $57 ($185 $128) February: Receipts $185.00 Amitas plan $185 submitted $0 deductible 80% x $185 co-insurance $148 paid Husbands plan $185 submitted $0 deductible

$185 could be paid, but since $148 was already paid under Amitas plan, her

husbands plan will pay $37 ($185 $148)

March receipts $185.00; payments will be the same as February, since deductibles

are already paid.

Two Dental Plans

Rose Mandible is a member of two group dental plans. Steno Casualty Ltd. does

not contain any coordination-of-benefits provisions in its contract, whereas

Workforce Ltd. does have coordination of benefits as part of its group policy.

Both plans pay 80% of eligible dental expenses.

Rose has eligible dental expenses of $235.99, for which she makes a claim under

both policies. What amount will each company pay to Rose?

FILE 40

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Steno is the primary carrier, because its contract contains no coordination-of-

benefits provision. Since its plan pays 80% of eligible expenses, it will pay Rose

benefits in the amount of $188.79 ($235.99 x 0.80).

Workforce also would have paid $188.79 if it had been the primary carrier, as its

coverage is also 80% of eligible claims. However, as the secondary carrier, it pays

the lesser of the amount it would have paid if it were the primary carrier ($188.79)

or 100% of eligible expenses, reduced by all other benefits payable for the same

expenses by the primary carrier. This amounts to $47.20 ($235.99 $188.79).