How Does Dual Health Insurance Coverage Work For Employees?

If you have the option to get dual health insurance , you may wonder whether you should or not. Read on to learn about the pros and cons.

How Dual Health Insurance Adds Up to More Coverage

With employer-sponsored health insurance coverage and two-income families the norm in America, it isn’t unusual for an employee to have dual health insurance coverage. Referring to the scenario where an employee can receive benefits through their company’s plan as well as their spouse’s (or parent’s) plan, dual health insurance coverage can provide workers with more extensive benefits and reduce their out-of-pocket costs for medical care. 

But integrating coverage and paying out claims when two carriers are involved can be tricky. Fortunately, the system facilitates the coordination of benefits in dual health insurance situations, ensuring that the two health plans complement each other rather than pay out twice for the same claim. Here’s how it works for employees who can leverage the benefits of two group health insurance programs.

Primary Plans and Secondary Plans with Dual Health Insurance

An employee enrolled in their company’s health insurance plan may also be a dependent covered under their spouse’s or parent’s employer-sponsored health plan. In such cases, the insurance carriers involved will designate one of those plans the “primary plan” for the employee while the other is the “secondary plan.”

Generally, the employee’s plan through their employer will be the primary, while coverage they obtain through their spouse’s plan will be secondary. For a child under age 26 who has coverage under a parent’s plan, that plan usually becomes secondary once their child gets coverage of their own through an employer. For a dependent child who has two plans through their parents, the “birthday rule” typically makes the policy of the older parent the primary and the younger parent’s plan secondary.

Benefits of Dual Health Insurance Coverage

Dual health insurance coverage can be an attractive option for eligible employees because the two plans can be essentially stacked on top of each other to provide more extensive benefits. This is particularly important when major illnesses, catastrophic injuries, or other large claims arise. 

In a dual coverage situation, the primary insurer will pay out benefits first. However, those benefits may not, and usually will not, cover all out-of-pocket expenses for a particular procedure, treatment, or hospitalization. In such cases, the secondary coverage would kick in, and the benefits under that plan could make up the difference in whole or in part. Dual coverage can often bring the employee’s costs down to zero for a given claim. 

Dual health insurance coverage also provides a backstop for an employee who loses their job. Without dual coverage, unemployed individuals who relied on their old employer for their health insurance could be left without any coverage whatsoever. Even though they could obtain coverage through individual and family healthcare marketplace, the cost may be prohibitive or the benefits may be woefully inadequate. 

But with dual coverage, that unemployed individuals will still have health insurance coverage and can obtain benefits through their spouse’s or parent’s plan without any interruption in benefits.  

Coordinating Dual Health Insurance Coverage

When an  employee has one set of big medical bills and two health insurance carriers that may be on the hook for paying them, those insurers need to work together to sort things out. They do so through a document and process called Coordination of Benefits (COB). 

A COB is how insurers allocate coverage between them and designate which plan works as the primary and which as the secondary. The primary plan kicks in first, with the secondary plan picking up any covered costs not paid by the primary insurer.

Potential Downsides of Dual Health Insurance Coverage

Expanded benefits and protection from losing coverage after losing a job are unequivocally positive aspects of dual health insurance coverage. However, like most things in life, those upsides come with some downsides as well. First, with two health insurance plans, the covered individuals pay twice as much in premiums as they would if they opted out of one plan and put all their coverage eggs in the basket of their spouse’s or parent’s plan.

Another challenge with dual health insurance coverage is that the coordination of benefits between two plans and two carriers can be complicated and sometimes messy. Things can get especially messy in situations where one plan is a PPO and the other is an HMO, or where a covered employee may also be eligible for Medicare.