What does "coordination of benefits" mean?

"Coordination of benefits" refers to the method used to determine the order in which multiple insurance plans will pay for claims when an individual is covered by more than one plan. This is essential in ensuring that the insured party does not receive more in benefits than the actual expense incurred, preventing overpayment for the same medical expenses.

When an individual is covered by more than one insurance plan, coordination helps clarify which plan is primary (the one that pays first) and which is secondary (the one that pays after the primary plan has contributed). This process involves evaluating various factors such as the specifics of each policy, which employer plan may have priority, or if they are individual plans.

This systematic approach ensures that claims are paid correctly and efficiently, protecting insurance companies from excess payouts while providing the insured with informed coverage. The focus of "coordination of benefits" is not on aligning premium costs, assessing different coverage comprehensively, or coordinating treatment among providers but rather specifically on how to manage claims across multiple insurance policies effectively.