What is Coordination of Benefits (COB) and How Does It Work?

Feb 10, 2015

Many of us have spouses who work either full-time or permanent part-time enough to qualify for participation in their employer-sponsored benefits plan. There are some benefits (typically Group Life Insurance, Accidental Death & Dismemberment and Long-Term Disability) which are mandatory for all employees but Extended Health Care (EHC) and Dental are often not mandatory if the employee is covered under their spouse’s plan. What are the employee’s options in this case?

The first option is to review the two benefit plans (both yours and your spouse’s) to determine which one is better, discerning which plan is superior in terms of coverage details and also the cost sharing arrangement in place for each plan. For example, does your employer pay 100% of EHC and Dental premiums or is it a 50%/50% cost share between you and the employer? Once a decision as to which plan is best has been made, then your whole family chooses to be covered by the superior plan for EHC and Dental and you “waive” these two benefits only through the plan you have determined to be “inferior”.

The second option is to be covered for family coverage by both your plan and your spouse’s plan at the same time. This strategy is called “Coordination of Benefits” or COB and how it works is as follows:

  • The plan that covers you as an employee is the plan that is first payer for your claims and then your spouse’s plan becomes the “top-up” plan or second payer.
  • For dependent children’s claims, the first payer is the plan (insurance company) of the parent or primary insured who has the earlier birthdate in the calendar year and the “top-up” or second payer is the other spouse’s (the one with the later birthdate in the calendar year) plan. For example, let’s assume your birthday is March 15 and your spouse’s is March 25. Your benefit plan would be first payer and your spouse’s plan becomes the “top-up” plan or second payer for each and every one of your dependent children.

Generally speaking, all insurance companies follow these same COB guidelines so it does not matter if your insurance company is the same as your spouse’s or not.

Hopefully, you now have a clearer understanding of what COB is and how it works. If you have any questions regarding this important feature of your benefits plan, please do not hesitate to consult with your TRG Benefits Advisor.

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