Obtaining Secondary Health Insurance Coverage

Quick answer

• Secondary health insurance acts as a safety net, covering costs your primary insurance doesn’t.
• It’s often used to fill gaps in coverage, like copayments, deductibles, or services not fully covered.
• The most common reason to get secondary insurance is for supplemental Medicare coverage.
• You typically need to have primary insurance in place before obtaining secondary coverage.
• Always verify coordination of benefits rules with both insurance providers.
• Review your current primary plan to identify potential coverage gaps before seeking secondary options.

What to check first (before you buy or change coverage)

Coverage needs

Before you look for secondary insurance, it’s crucial to understand what your primary insurance covers and where it falls short. Review your Explanation of Benefits (EOB) statements from your primary insurer to identify common out-of-pocket expenses like deductibles, copayments, and coinsurance. Are there specific services or treatments that aren’t fully covered? For example, if your primary plan has high prescription drug copays, a secondary plan might help reduce those costs.

Deductibles and premiums

Secondary insurance adds to your overall monthly healthcare expenses. You’ll pay a premium for the secondary policy in addition to your primary insurance premium. It’s essential to compare the cost of the secondary premium against the potential savings you might achieve by having it cover a portion of your out-of-pocket costs. A plan with a low premium might offer limited benefits, while a higher premium could provide more substantial coverage.

Exclusions and limits (general)

Every insurance policy has exclusions (what it doesn’t cover) and limits (maximum amounts it will pay). Your secondary policy will also have its own set of exclusions and limits. It’s vital to read the fine print to ensure the secondary coverage complements your primary plan and doesn’t have overlapping exclusions that would leave you exposed. For instance, if your primary plan excludes a certain type of therapy, your secondary plan likely will too.

Claim process

Understanding how claims are processed with secondary insurance is key. This is known as “coordination of benefits.” Generally, your primary insurer pays first, and then your secondary insurer pays any remaining eligible costs. You’ll typically submit claims to your primary insurer first, and they will send an EOB. If there are still costs to cover, you might need to forward that EOB to your secondary insurer, or they may have an automated process. Always confirm the specific procedure with both providers.

Bundling and discounts (general)

Sometimes, purchasing multiple insurance policies from the same company can lead to discounts. If you have your auto and home insurance with one provider, they might offer a discount if you also purchase your secondary health insurance from them. It’s worth inquiring about any potential bundling opportunities or other discounts that could lower your overall insurance costs.

Step-by-step (simple workflow)

1. Assess Primary Coverage:

• What to do: Review your current health insurance policy documents, EOBs, and consult with your primary insurer to understand your coverage details, including deductibles, copays, coinsurance, and any annual or lifetime limits.
• What “good” looks like: You have a clear understanding of what your primary insurance covers and what out-of-pocket expenses you typically incur.
• Common mistake: Assuming you know your coverage without reviewing documents.
• How to avoid: Schedule time to read your policy summary and call your insurer with specific questions about your most common medical expenses.

2. Identify Coverage Gaps:

• What to do: Based on your assessment, pinpoint specific areas where your primary insurance’s coverage is insufficient or where you incur significant out-of-pocket costs. This could be prescription drugs, dental, vision, or specific medical treatments.
• What “good” looks like: You have a list of 1-3 specific coverage areas that would benefit from supplemental insurance.
• Common mistake: Not being specific about the gaps, leading to purchasing unnecessary coverage.
• How to avoid: Focus on the costs you actually pay each year, not just potential future needs.

3. Research Secondary Insurance Options:

• What to do: Explore different types of secondary insurance that might address your identified gaps. This could include Medicare Supplement (Medigap) plans if you have Medicare, or specific riders or supplemental policies from private insurers.
• What “good” looks like: You have identified 2-3 types of secondary insurance that seem to align with your needs.
• Common mistake: Only looking at one type of secondary insurance without considering alternatives.
• How to avoid: Broaden your search to include different product categories that address your specific gaps.

4. Understand Coordination of Benefits (COB):

• What to do: Learn how your primary and secondary insurers will work together to pay claims. Understand which plan is “primary” and which is “secondary” for different situations.
• What “good” looks like: You understand the general order of claim payment and how information is shared between insurers.
• Common mistake: Assuming the secondary insurer will pay automatically without primary insurance involvement.
• How to avoid: Ask potential secondary providers to explain their COB process in detail.

5. Compare Premiums and Benefits:

• What to do: Obtain quotes for the secondary insurance policies you are considering. Compare the monthly premiums, deductibles, copays, coinsurance, and coverage limits of each option.
• What “good” looks like: You have a clear comparison chart showing the costs and benefits of at least two secondary insurance options.
• Common mistake: Focusing only on the premium cost without considering the actual benefits provided.
• How to avoid: Calculate the total annual cost (premium + estimated out-of-pocket expenses with the secondary plan) for each option.

6. Check for Exclusions and Limitations:

• What to do: Carefully read the policy documents for any exclusions or limitations that might prevent the secondary insurance from covering the costs you need it to.
• What “good” looks like: You are confident that the secondary policy covers the specific gaps you identified and doesn’t have significant exclusions that would render it useless for your needs.
• Common mistake: Overlooking pre-existing condition clauses or specific service exclusions.
• How to avoid: Ask the insurance provider to explicitly state what is not covered under the policy.

7. Verify Eligibility Requirements:

• What to do: Ensure you meet all eligibility criteria for the secondary insurance. For example, some plans require you to be enrolled in Medicare Parts A and B before you can purchase a Medigap policy.
• What “good” looks like: You have confirmed you are eligible for the secondary insurance you wish to purchase.
• Common mistake: Applying for a policy you are not eligible for, wasting time and effort.
• How to avoid: Always check the insurer’s website or speak to a representative about eligibility before applying.

8. Apply for Coverage:

• What to do: Complete the application process for your chosen secondary insurance. Be prepared to provide information about your health history and your primary insurance.
• What “good” looks like: Your application is submitted accurately and completely.
• Common mistake: Providing incomplete or inaccurate information on the application.
• How to avoid: Double-check all information before submitting and keep copies of your application.

9. Confirm Policy Activation:

• What to do: Once approved, receive your policy documents and confirm the effective date of your coverage.
• What “good” looks like: You have received your policy and understand when your coverage begins.
• Common mistake: Assuming coverage starts immediately after application approval.
• How to avoid: Mark the effective date in your calendar and review the policy details.

10. Inform Your Primary Insurer (If Necessary):

• What to do: In some cases, you may need to inform your primary insurer about your secondary coverage, especially if they are the secondary payer in a specific scenario.
• What “good” looks like: You have followed any required notification procedures to ensure smooth claim processing.
• Common mistake: Not informing the relevant party, leading to claim delays.
• How to avoid: Ask both insurers if any notification is required from your end.

Common mistakes (and what happens if you ignore them)

Mistake	What it causes	Fix
Not understanding primary coverage	Purchasing secondary insurance that duplicates existing coverage or doesn’t fill the actual identified gaps.	Thoroughly review your primary insurance policy and EOBs to identify specific out-of-pocket costs and coverage limitations.
Ignoring coordination of benefits (COB) rules	Claims may be denied or significantly delayed because they weren’t submitted in the correct order.	Ask both your primary and potential secondary insurers to explain their COB process and how claims are handled.
Focusing solely on low premiums	The secondary policy may have high deductibles, copays, or significant exclusions, offering little actual benefit.	Compare total potential annual costs (premiums + estimated out-of-pocket expenses) and ensure the benefits align with your needs.
Failing to read policy exclusions and limits	Discovering that the secondary insurance doesn’t cover the specific medical needs you anticipated.	Carefully read the policy document’s “Exclusions” and “Limitations” sections before purchasing.
Not verifying eligibility	Applying for a plan you’re not eligible for, wasting time and potentially facing application denial.	Confirm eligibility requirements with the insurer before applying; for example, ensuring you have primary Medicare coverage.
Providing inaccurate or incomplete application info	Policy denial, cancellation, or even invalidation of coverage if discovered later.	Double-check all details on your application for accuracy and completeness before submitting. Keep a copy for your records.
Assuming secondary coverage is automatic	Having claims denied because the secondary insurer wasn’t aware of the primary coverage or vice versa.	Understand the claim submission process and follow the required steps for both primary and secondary insurers.
Not considering the total cost of insurance	Underestimating your annual healthcare expenses by only looking at individual policy premiums.	Calculate the combined premiums of your primary and secondary plans, plus estimated out-of-pocket costs for a realistic picture.
Delaying the purchase of supplemental Medicare	Missing out on enrollment periods, leading to higher premiums or limited coverage options later on.	Understand Medicare’s enrollment windows (like the Medigap Open Enrollment Period) and act within them.

Decision rules (simple if/then)

• If you are enrolled in Medicare Parts A and B, then consider a Medicare Supplement (Medigap) policy because these plans are designed to fill the gaps in Original Medicare coverage.
• If your primary insurance has a high deductible, then look for a secondary plan with a lower deductible or one that covers a significant portion of your deductible.
• If your primary insurance has limited prescription drug coverage, then research supplemental policies that offer robust prescription drug benefits.
• If you frequently visit specialists, then check if your primary insurance has restrictive referral requirements and if a secondary plan can offer more flexibility.
• If you are comparing two secondary insurance plans with similar benefits, then choose the one with the lower premium because this will reduce your overall annual healthcare costs.
• If you have a chronic condition requiring ongoing treatment, then ensure the secondary policy covers those specific treatments and doesn’t have restrictive pre-existing condition clauses.
• If you are considering purchasing secondary insurance from a company you already have other policies with, then inquire about bundling discounts because this can lower your overall insurance expenses.
• If you are unsure about the coordination of benefits process, then contact both your primary and potential secondary insurers to clarify how claims will be processed.
• If a secondary insurance policy has a very low premium, then scrutinize its exclusions and limitations carefully because the low cost may come with significantly reduced coverage.
• If your primary insurance is employer-sponsored, then verify that supplemental coverage will coordinate properly with your employer plan before purchasing.

FAQ

What is the difference between primary and secondary health insurance?

Primary insurance is the first plan that pays for your medical services. Secondary insurance, also known as supplemental insurance, kicks in after the primary insurance has paid its portion, covering remaining costs like deductibles, copayments, or services not fully covered by the primary plan.

When should I consider getting secondary health insurance?

You should consider secondary insurance when your primary coverage has significant gaps, high out-of-pocket costs, or doesn’t cover certain services you need. This is common for individuals with Medicare who want to cover costs not paid by Original Medicare.

How does coordination of benefits work?

Coordination of benefits (COB) is the process by which two or more insurance plans determine which plan pays first and how much each plan will pay for a claim. Generally, the primary insurer pays first, and the secondary insurer pays any remaining eligible costs up to its coverage limits.

Can I have secondary insurance without primary insurance?

No, you typically need to have primary health insurance in place before you can obtain secondary coverage. The secondary policy is designed to supplement, not replace, your primary coverage.

What are common examples of secondary health insurance?

Common examples include Medicare Supplement (Medigap) plans for those with Medicare, dental or vision insurance to supplement a general health plan, or specific critical illness policies that pay a lump sum upon diagnosis.

Will secondary insurance increase my monthly costs?

Yes, secondary insurance will increase your monthly costs because you will be paying a premium for the secondary policy in addition to your primary insurance premium. The goal is that the benefits received will outweigh this additional cost.

How do I find out if my secondary insurance will cover a specific service?

You should always check the policy documents for your secondary insurance, specifically the sections on coverage, exclusions, and limitations. It’s also advisable to contact the secondary insurer directly and ask if a particular service or treatment is covered after your primary insurance has paid.

What is a “birthday rule” in coordination of benefits?

The birthday rule is a method used to determine which parent’s health insurance is primary for a dependent child when the parents are not married. The insurance plan of the parent whose birthday falls earliest in the year is considered primary.

What this page does NOT cover (and where to go next)

• Specific details on Medicare Advantage plans and how they differ from Medigap.
• The intricacies of employer-sponsored health insurance and how supplemental plans interact.
• Detailed explanations of every type of supplemental insurance available (e.g., long-term care, disability insurance).
• Navigating specific state regulations or insurance marketplaces for supplemental plans.
• The process of appealing denied claims with either primary or secondary insurers.
• Financial planning for long-term healthcare costs beyond immediate insurance needs.