It's Open Season! - Coinsurance, Secondary Insurance, and Supplemental Insurance

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There are pieces of the health insurance puzzle that aren’t as well-known as the others. Like those last puzzle pieces around the edges, coinsurance and secondary insurance are not as definitive to a policy as central pieces like premiums or deductibles, but still vital to finish the whole.


Coinsurance is when you pay a percentage of the cost for a service or medication and the insurance company pays the rest. You probably have coinsurance built into your plan. It can be instead of co-pays or in addition (for out-of-pocket expenses). It can also be applied to the entire cost or the remainder after the plan pays the negotiated price for service. If you can figure out how many and what portion of service and medication costs coinsurance will cover under your insurance plan, you should add the calculation to your estimate of total annual cost before you choose your plan. 

Generally, plans with lower premiums have a higher percentage paid by the patient, and higher premiums have lower percentages.

Secondary insurance

Secondary insurance is exactly what it sounds like. It’s when you are covered by two separate insurance policies, a primary that pays most of your expenses and a secondary that picks up what’s not covered, or most of it (hopefully). You may not be aware that you are allowed to have two insurance policies. Most people don’t. However, if you have Medicare, you can also have another plan such as an individual plan, a plan from your employer (previous if you are retired), or Medigap insurance, or if your family has two working adults, you can buy coverage from both employers.

Coordination of Benefits (COB) rules dictate which plan is primary and which plan is secondary. Each state’s insurance commissioner sets guidelines that help insurers determine which plan is primary and which is secondary. Once that is settled, the primary will pay for what is covered under its plan as if there weren’t a secondary plan, and the secondary will consider what the primary plan has paid, and decide what to pay of the remaining costs.

A secondary insurance plan can’t pay anything toward the primary plan’s deductible. If both primary and secondary insurance plans have deductibles, you may have to pay both before full plan benefits kick in.

Secondary insurance is NOT the same as supplemental insurance

Well, except if you are talking about Medigap, Medicare’s supplemental insurance.

Outside of Medicare, though, things work differently. Secondary health insurance is a second main insurance plan. Supplemental insurance adds categories to what is covered under those main health insurance plan(s). Vision, dental, accidental death and dismemberment, long term care insurance, and Aflac-type plans that pay for regular living expenses should you be incapacitated can all be considered supplemental plans.

Purchase of supplemental insurance depends on the cost and availability of the plans, as well as how much risk you have for each insurance category. Most employers offer vision and dental insurance, and most people purchase it if they have the opportunity since teeth and eyes can develop issues if not properly maintained. But there are other types of supplemental insurance that could also be helpful. Accidental death and dismemberment insurance would be valuable to someone working in construction. I bought long term care insurance when I was 29. I suspect I will need it one day and the company didn’t require a medical exam if I enrolled in the first 30 days of employment with that employer. I wouldn’t need it for a long time, but I might have never gotten the chance to buy it so cheaply again.

The time is almost here!

Many employer-based insurance plans do their best to sync with government plans, which means that Open Season will start on November 1st for most of us.

There are a lot of elements to consider when picking or updating your insurance coverage (such as calculating costs, health savings, and plan basics). As you calculate costs to make your choice, don’t forget to factor in the options above. Coinsurance can be an unexpected and unplanned-for expense that is harder to calculate than some other types of payments, but secondary or supplemental insurance can help you get close to 100% coverage. Good luck picking your plan!