Coordination of Benefits vs. Explanation of Benefits
Author: Simply Benefits Marketing
If you’re enrolled in a group benefits plan it’s likely you’ll come across the terms Coordination of Benefits (COB) and Explanation of Benefits (EOB). Each of these terms has to do with submitting claims and receiving reimbursement, so it’s important that you are familiar with them!
In this blog, we’ll outline the details of COBs and EOBs and describe the connection between them, so you’ll be able to submit claims easier and without confusion.
What is a Coordination of Benefits?
An Employee Benefits plan is centered around receiving health services, as well as paying and adjudicating claims. When you use a service that is part of your health plan (massage, chiropractic, etc), you’ll need to submit a claim to be reimbursed for the amount that you are covered for. Once submitted, your insurance company is responsible for paying your claim and providing you with a record of that payment. In some cases, if your spouse is also part of a group benefit plan, you may be eligible for additional coverage under their plan as well. This comes in handy if your benefits plan only covers a percentage of a service (ex. If only 80% of your massage therapy is covered under your health plan, you may be able to submit the remaining 20% under your spouse’s plan). Figuring out how to coordinate between both plans is where Coordination of Benefits comes in.
Coordination of Benefits (COB) describes the process of claims payment for employees that have dependents who are a part of their own group benefit plan. A dependent is a person who relies on you financially that you include in your group benefits plan, or you are included in theirs. The rules of COBs outline which plan pays first and how benefits are calculated when claims are made to more than one group plan. This is common especially among families with two working adults that each have group benefits that are using their insurance for their child dependents.
The company that provides your insurance will likely take care of the nitty-gritty details in terms of payment, but there are some things that you should know regarding common issues that happen with a COB. Here are some general rules when it comes to COBs.
1. If you are a member under a plan, you must submit the claim to your own plan first. However, if you have the same status under more than one plan, the plan that covered you the longest pays first. For example, if you have two part-time jobs with benefits, one that started in 2018 and one that started in 2019, you would submit your claim to the plan that was started in 2018 and it will also be the one that pays first.
2. If you and your dependent spouse both have employee benefits and you want to use those benefits on a child, the primary payer (the first payer responsible for claim processing) is decided by the birthday rule. Whoever’s birthday is earlier by month and day in the calendar year is the plan who pays first. If both parent’s birthdays happen to be on the same day, the parent whose first name appears first in the alphabet pays first. For example, if two parents whose child is covered under both insurance have birthdays on October 11 and September 21, the parent with the September birthday will pay the claim first.
Of course, there are other cases such as for retired people or post-secondary students. For those cases, refer to your employee booklet or contact your plan administrator for more information, so you know how to submit your claims properly.
What happens if I make a mistake? Well, if you accidentally submit a claim to the wrong insurance provider, it will likely get denied. However, the easy fix to this is to just resubmit it to the right provider.
It’s important to always keep your dependent information up to date, so when you submit claims, they are processed correctly and won’t get denied. Any time your dependent information is changed, including the birth of a child, or divorce, you should contact your plan administrator with the updates.
What is an Explanation of Benefits?
An explanation of benefits (EOB) is a statement that includes details about a medical insurance claim that explains what portion was paid to the health provider and how much the employee is responsible to pay. This is generated and sent once it has been fully adjudicated or processed. EOBs will be received any time an employee makes a claim to an extended health care service. The key thing to keep in mind about EOBs is that they are not bills, they are only for your reference to how much you will owe.
Since EOBs are more of a record of payment rather than a bill, you don’t have to do much with an EOB. You may receive an actual bill later on if you owe money for your claim, but typically you can file away your EOB for reference. EOBs help you understand the value that you get out of our insurance plan. Simply Benefits stores all of your previous EOBs on your employee profile so you can reference them whenever you need to.
How are they Connected?
EOBs and COBs go hand in hand. The EOB that you receive after you submit a claim can and will be used to receive a COB from another insurance provider.
Here is an example. With Simply Benefits, when you submit any kind of claim, you’ll receive an EOB. If your plan doesn’t cover the full amount, and you want your dependent’s plan to cover the rest, you’ll send the EOB along with the original receipt to your dependent’s health insurer. They’ll take care of the rest of the payment, and you may or may not receive another EOB from the other health insurer. It’s an easy process, but it definitely pays to know the difference between the two terms.
Hopefully, you now have a better understanding of how EOBs and COBs work, so the next time you submit a claim you won’t have to worry about there being any complications.
If you’re a Simply Benefits plan member, talk to your plan administrator or contact firstname.lastname@example.org to find out details about your coordination of benefits and what to expect from an EOB.