Most people know the essentials of coordination of benefits (COB); however, there are a few details that are less widely known. These details are important to understand. They allow you to get the most from the different benefits plans you and your dependents are covered under.
Coordination of Benefits Basics
If you are uncertain about how coordination of benefits works, Canadian Life and Health Insurance Association Inc. (CLHIA) provides an excellent guide.
Essentially, if you have a benefits plan and you are also a dependent on your spouse’s plan, your plan pays your claim first; your spouse’s plan pays your claim second.
If you and your spouse have dependent children, the plan of the parent with the earlier birthday in the calendar year (regardless of actual age) pays first.
All these details, along with further clarification on more complicated situations, are detailed in the CLHIA guide. Click here for the guide.
Coordinating Benefits for Dependent Post-Secondary Students
We often receive questions from parents about how benefits coverage will work for their older children who are entering post-secondary education (university, college, etc.). Many post-secondary institutions offer student benefits plans, and parents want to know whether they should put their child on the student plan, keep them as a dependent on their own plan, or a combination of the two.
The good news is that students can be on the student plan and still be dependents under their parents’ plan. It’s simply a variation on the standard coordination of benefits.
The student benefit plan is considered the primary plan (the student is covered as though they were an employee). Therefore, claims should be submitted to the student plan first. Any remainder can then be claimed under the parents’ plan as a dependent.
Coordinating Benefits with an Auto Insurance Provider
Coordinating your benefits plan with an auto insurer can be an exception to the regular rules. The rules vary province by province, depending on the provincial legislation. In some cases, the auto insurance will be the first payor, while in others it will be the second.
If you are in this situation, you should check with your benefits provider or with your auto insurer to find out what the legislation is in your province.
Coordinating Benefits with a Healthcare Spending Account
The rule for coordinating a core health and dental plan with a healthcare spending account (HCSA) is straightforward: the HCSA always pays last.
If one spouse has a conventional benefits plan and the other spouse has an HCSA, all family expenses should go first to the core health and dental plan – even claims for the spouse whose primary plan is the HCSA. Any remainder after claims have gone through the core plan can then be sent to the HCSA.
Another more complicated example: you have a flexible benefits plan with both core and HCSA components, and your spouse has a conventional benefits plan. In this case, you would send your claim to your core benefits plan first. Then you would submit any remainder to your spouse’s plan. Finally, at the end, send any still-uncovered costs to your own HCSA.
It may seem complicated, but all you need to remember is that HCSAs always pay last. They are the final resort, to cover anything that isn’t covered by your other plans. You don’t want to waste HCSA funds on expenses that are covered by your core benefits plan.
Know Your Benefits!
To get the most effective use of your benefits plans, you need to coordinate benefits wisely! Being clear on these smaller details will help you maximize your healthcare coverage.
Curious about Healthcare Spending Accounts? Check out our FREE eBook: The Smart Employer’s Guide to Healthcare Spending Accounts.
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