# Title 45 — Insurance, Commissioner of

## Article 45-08 — Group Insurance

## Chapter 45-08-01.2 — Coordination of Benefits Regulation

### § 45-08-01.2-01. Definitions.

As used in this chapter, these words and terms have the following meanings, unless the context
clearly indicates otherwise:
1. a. "Allowable expense", except as set forth below or when a statute requires a different
definition, means any health care expense, including coinsurance or copayments and
without reduction for any applicable deductible, that is covered in full or in part by any of
the plans covering the person.
b. If a plan is advised by a covered person that all plans covering the person are
high-deductible health plans and the person intends to contribute to a health savings
account established in accordance with section 223 of the Internal Revenue Code of
1986, the primary high-deductible health plan's deductible is not an allowable expense,
except for any health care expense incurred that may not be subject to the deductible as
described in section 223(c)(2)(C) of the Internal Revenue Code of 1986.
c. An expense or a portion of an expense that is not covered by any of the plans is not an
allowable expense.
d. Any expense that a provider by law or in accordance with a contractual agreement is
prohibited from charging a covered person is not an allowable expense.
e. The following are examples of expenses that are not allowable expenses:
(1) If a person is confined in a private hospital room, the difference between the cost of
a semiprivate room in the hospital and the private room is not an allowable expense,
unless one of the plans provides coverage for private hospital room expenses.
(2) If a person is covered by two or more plans that compute their benefit payments on
the basis of usual and customary fees or relative value schedule reimbursement or
other similar reimbursement methodology, any amount charged by the provider in
excess of the highest reimbursement amount for a specified benefit is not an
allowable expense.
(3) If a person is covered by two or more plans that provide benefits or services on the
basis of negotiated fees, any amount in excess of the highest of the negotiated fees
is not an allowable expense.
(4) If a person is covered by one plan that calculates its benefits or services on the
basis of usual and customary fees or relative value schedule reimbursement or
other similar reimbursement methodology and another plan that provides its benefits
or services on the basis of negotiated fees, the primary plan's payment arrangement
shall be the allowable expense for all plans. However, If the provider has contracted
with the secondary plan to provide the benefit or service for a specific negotiated fee

or payment amount that is different than the primary plan's payment arrangement
and if the provider's contract permits, that negotiated fee or payment shall be the
allowable expense used by the secondary plan to determine its benefits.
f. The definition of "allowable expense" may exclude certain types of coverage or benefits
such as dental care, vision care, prescription drugs, or hearing aids. A plan that limits the
application of coordination of benefits to certain coverages or benefits may limit the
definition of allowable expense in its contract to expenses that are similar to the
expenses that it provides. When coordination of benefits is restricted to specific
coverages or benefits in a contract, the definition of allowable expense shall include
similar expenses to which coordination of benefits applies.
g. When a plan provides benefits in the form of services, the reasonable cash value of each
service will be considered an allowable expense and a benefit paid.
h. The amount of the reduction may be excluded from allowable expense when a covered
person's benefits are reduced under a primary plan:
(1) Because the covered person does not comply with the plan provisions concerning
second surgical opinions or precertification of admissions or services; or
(2) Because the covered person has a lower benefit because the covered person did
not use a preferred provider.
2. "Birthday" refers only to month and day in a calendar year and does not include the year in
which the individual is born.
3. "Claim" means a request that benefits of a plan be provided or paid. The benefits claimed may
be in the form of:
a. Services, including supplies;
b. Payment for all or a portion of the expenses incurred;
c. A combination of subdivisions a and b; or
d. An indemnification.
4. "Closed panel plan" means a plan that provides health benefits to covered persons primarily in
the form of services through a panel of providers that have contracted with or are employed by
the plan, and that excludes benefits for services provided by other providers, except in cases
of emergency or referral by a panel member.
5. "Consolidated Omnibus Budget Reconciliation Act of 1985" or "COBRA" means coverage
provided under a right of continuation pursuant to federal law.
6. "Coordination of benefits" or "COB" means a provision establishing an order in which plans
pay their claims, and permitting secondary plans to reduce their benefits so that the combined
benefits of all plans do not exceed total allowable expenses.
7. "Custodial parent" means:
a. The parent awarded custody of a child by a court decree; or
b. In the absence of a court decree, the parent with whom the child resides more than
one-half of the calendar year without regard to any temporary visitation.

8. a. "Group-type contract" means a contract that is not available to the general public and is
obtained and maintained only because of membership in or a connection with a particular
organization or group, including blanket coverage.
b. "Group-type contract" does not include an individually underwritten and issued
guaranteed renewable policy even if the policy is purchased through payroll deduction at
a premium savings to the insured since the insured would have the right to maintain or
renew the policy independently of continued employment with the employer.
9. "High-deductible health plan" has the meaning given the term under section 223 of the Internal
Revenue Code of 1986, as amended by the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003.
10. a. "Hospital indemnity benefits" means benefits not related to expenses incurred.
b. "Hospital indemnity benefits" does not include reimbursement-type benefits even if they
are designed or administered to give the insured the right to elect indemnity-type benefits
at the time of claim.
11. a. "Plan" means a form of coverage with which coordination is allowed. Separate parts of a
plan for members of a group that are provided through alternative contracts that are
intended to be part of a coordinated package of benefits are considered one plan and
there is no coordination of benefits among the separate parts of the plan.
b. If a plan coordinates benefits, its contract shall state the types of coverage that will be
considered in applying the coordination of benefits provision of that contract. Whether the
contract uses the term "plan" or some other term such as "program", the contractual
definition may be no broader than the definition of "plan" in this subsection. The definition
of "plan" in the model coordination of benefits provision in appendix A is an example.
c. "Plan" includes:
(1) Group and nongroup insurance contracts and subscriber contracts;
(2) Uninsured arrangements of group or group-type coverage;
(3) Group and nongroup coverage through closed panel plans;
(4) Group-type contracts;
(5) The medical care components of long-term care contracts, such as skilled nursing
care;
(6) The medical benefits coverage in automobile "no-fault" and traditional automobile
"fault" type contracts subject to the provisions of the North Dakota no-fault
coordination of benefits provisions as set forth in subsection 3 of section 26.1-41-13;
and
(7) Medicare or other governmental benefits, as permitted by law, except as provided in
paragraph 8 of subdivision d. That part of the definition of plan may be limited to the
hospital, medical, and surgical benefits of the governmental program.
d. "Plan" does not include:
(1) Hospital indemnity coverage benefits or other fixed indemnity coverage;
(2) Accident only coverage;

(3) Specified disease or specified accident coverage;
(4) Limited benefit health coverage;
(5) School accident-type coverages that cover students for accidents only, including
athletic injuries, either on a twenty-four-hour basis or on a "to and from school"
basis;
(6) Benefits provided in long-term care insurance policies for nonmedical services, for
example, personal care, adult day care, homemaker services, assistance with
activities of daily living, respite care, and custodial care or for contracts that pay a
fixed daily benefit without regard to expenses incurred or the receipt of services;
(7) Medicare supplement policies;
(8) A state plan under Medicaid; or
(9) A governmental plan, which by law, provides benefits that are in excess of those of
any private insurance plan or other nongovernmental plan.
12. "Policyholder" means the primary insured named in a nongroup insurance policy.
13. "Primary plan" means a plan whose benefits for a person's health care coverage must be
determined without taking the existence of any other plan into consideration. A plan is a
primary plan if:
a. The plan either has no order of benefit determination rules, or its rules differ from those
permitted by this regulation; or
b. All plans that cover the person use the order of benefit determination rules required by
this regulation, and under those rules the plan determines its benefits first.
14. "Secondary plan" means a plan that is not a primary plan.
History: Effective January 1, 2006.
General Authority: NDCC 26.1-36-38
Law Implemented: NDCC 26.1-36-10, 26.1-36-29, 26.1-41-13
### § 45-08-01.2-02. Applicability and scope.

This chapter applies to all plans that are issued on or after the effective date of this chapter.
History: Effective January 1, 2006.
General Authority: NDCC 26.1-36-38
Law Implemented: NDCC 26.1-36-10, 26.1-36-29, 26.1-41-13
### § 45-08-01.2-03. Use of model coordination of benefits contract provisions.

1. Appendix A contains a model coordination of benefits provision for use in contracts. The use of
this model coordination of benefits provision is subject to the provisions of subsections 2, 3,
and 4 and to the provisions of section 45-08-01.2-04.
2. Appendix B is a plain language description of the coordination of benefits process that
explains to the covered person how health plans will implement coordination of benefits. It is
not intended to replace or change the provisions that are set forth in the contract. Its purpose
is to explain the process by which the two or more plans will pay for or provide benefits.

3. The coordination of benefits provision contained in appendix A and the plain language
explanation in appendix B do not have to use the specific words and format shown in
appendix A or appendix B. Changes may be made to fit the language and style of the rest of
the contract or to reflect differences among plans that provide services, that pay benefits for
expenses incurred, and that indemnify. No substantive changes are permitted.
4. A coordination of benefits provision may not be used that permits a plan to reduce its benefits
on the basis that:
a. Another plan exists and the covered person did not enroll in that plan;
b. A person is or could have been covered under another plan, except with respect to part B
of Medicare; or
c. A person has elected an option under another plan providing a lower level of benefits
than another option that could have been elected.
5. No plan may contain a provision that its benefits are "always excess" or "always secondary"
except in accordance with the rules permitted by this regulation.
6. Under the terms of a closed panel plan, benefits are not payable if the covered person does
not use the services of a closed panel provider. In most instances, coordination of benefits
does not occur if a covered person is enrolled in two or more closed panel plans and obtains
services from a provider in one of the closed panel plans because the other closed panel plan
(the one whose providers were not used) has no liability. However, coordination of benefits
may occur during the plan year when the covered person receives emergency services that
would have been covered by both plans. Then the secondary plan shall use the provisions of
section 45-08-01.2-05 to determine the amount it should pay for the benefit.
7. No plan may use a coordination of benefits provision, or any other provision that allows it to
reduce its benefits with respect to any other coverage its insured may have that does not meet
the definition of plan under subsection 11 of section 45-08-01.2-01.
History: Effective January 1, 2006.
General Authority: NDCC 26.1-36-38
Law Implemented: NDCC 26.1-36-10, 26.1-36-29, 26.1-41-13
### § 45-08-01.2-04. Rules for coordination of benefits.

When a person is covered by two or more plans, the rules for determining the order of benefit
payments are as follows:
1. a. The primary plan shall pay or provide its benefits as if the secondary plan or plans did not
exist.
b. If the primary plan is a closed panel plan and the secondary plan is not a closed panel
plan, the secondary plan shall pay or provide benefits as if it were the primary plan when
a covered person uses a nonpanel provider, except for emergency services or authorized
referrals that are paid or provided by the primary plan.
c. When multiple contracts providing coordinated coverage are treated as a single plan
under this chapter, this section applies only to the plan as a whole, and coordination
among the component contracts is governed by the terms of the contracts. If more than
one carrier pays or provides benefits under the plan, the carrier designated as primary
within the plan shall be responsible for the plan's compliance with this regulation.

d. If a person is covered by more than one secondary plan, the order of benefit
determination rules of this chapter decide the order in which secondary plans benefits
are determined in relation to each other. Each secondary plan shall take into
consideration the benefits of the primary plan or plans and the benefits of any other plan,
which under the rules of this chapter, has its benefits determined before those of that
secondary plan.
2. a. Except as provided in subdivision b, a plan that does not contain order of benefit
determination provisions that are consistent with this chapter is always the primary plan
unless the provisions of both plans, regardless of the provisions of this subdivision, state
that the complying plan is primary.
b. Coverage that is obtained by virtue of membership in a group and designed to
supplement a part of a basic package of benefits may provide that the supplementary
coverage shall be excess to any other parts of the plan provided by the contractholder.
Examples of these types of situations are major medical coverages that are
superimposed over base plan hospital and surgical benefits, and insurance-type
coverages that are written in connection with a closed panel plan to provide
out-of-network benefits.
3. A plan may take into consideration the benefits paid or provided by another plan only when,
under the rules of this chapter, it is secondary to that other plan.
4. Order of benefits determination. Each plan determines its order of benefits using the first of
the following rules that applies:
a. Nondependent or dependent.
(1) Subject to paragraph 2, the plan that covers the person other than as a dependent,
for example as an employee, member, subscriber, policyholder, or retiree, is the
primary plan and the plan that covers the person as a dependent is the secondary
plan.
(2) (a) If the person is a Medicare beneficiary, and, as a result of the provisions of
title XVIII of the Social Security Act and implementing regulations, Medicare is:
[1] Secondary to the plan covering the person as a dependent; and
[2] Primary to the plan covering the person as other than a dependent (e.g.,
a retired employee).
(b) Then the order of benefits is reversed so that the plan covering the person as
an employee, member, subscriber, policyholder, or retiree is the secondary
plan and the other plan covering the person as a dependent is the primary
plan.
b. Dependent child covered under more than one plan. Unless there is a court decree
stating otherwise, plans covering a dependent child shall determine the order of benefits
as follows:
(1) For a dependent child whose parents are married or are living together, whether or
not they have ever been married:
(a) The plan of the parent whose birthday falls earlier in the calendar year is the
primary plan; or

(b) If both parents have the same birthday, the plan that has covered the parent
longest is the primary plan.
(2) For a dependent child whose parents are divorced or separated or are not living
together, whether or not they have ever been married:
(a) If a court decree states that one of the parents is responsible for the dependent
child's health care expenses or health care coverage and the plan of that
parent has actual knowledge of those terms, that plan is primary. If the parent
with responsibility has no health care coverage for the dependent child's health
care expenses, but that parent's spouse does, that parent's spouse's plan is
the primary plan. This item shall not apply with respect to any plan year during
which benefits are paid or provided before the entity has actual knowledge of
the court decree provisions;
(b) If a court decree states that both parents are responsible for the dependent
child's health care expenses or health care coverage, the provisions of
paragraph 1 shall determine the order of benefits;
(c) If a court decree states that the parents have joint custody without specifying
that one parent has responsibility for the health care expenses or health care
coverage of the dependent child, the provisions of paragraph 1 shall determine
the order of benefits; or
(d) If there is no court decree allocating responsibility for the child's health care
expenses or health care coverage, the order of benefits for the child are as
follows:
[1] The plan covering the custodial parent;
[2] The plan covering the custodial parent's spouse;
[3] The plan covering the noncustodial parent; and then
[4] The plan covering the noncustodial parent's spouse.
(3) For a dependent child covered under more than one plan of individuals who are not
the parents of the child, the order of benefits shall be determined, as applicable,
under paragraph 1 or 2 as if those individuals were parents of the child.
c. Active employee or retired or laid-off employee.
(1) The plan that covers a person as an active employee that is an employee who is
neither laid off nor retired or as a dependent of an active employee is the primary
plan. The plan covering that same person as a retired or laid-off employee or as a
dependent of a retired or laid-off employee is the secondary plan.
(2) If the other plan does not have this rule, and as a result, the plans do not agree on
the order of benefits, this rule is ignored.
(3) This rule does not apply if the rule in subdivision a can determine the order of
benefits.
d. COBRA or state continuation coverage.
(1) If a person whose coverage is provided pursuant to COBRA or under a right of
continuation pursuant to state or other federal law is covered under another plan,
the plan covering the person as an employee, member, subscriber, or retiree or

covering the person as a dependent of an employee, member, subscriber, or retiree
is the primary plan and the plan covering that same person pursuant to COBRA or
under a right of continuation pursuant to state or other federal law is the secondary
plan.
(2) If the other plan does not have this rule, and if as a result, the plans do not agree on
the order of benefits, this rule is ignored.
(3) This rule does not apply if the rule in subdivision a can determine the order of
benefits.
e. Longer or shorter length of coverage.
(1) If the preceding rules do not determine the order of benefits, the plan that covered
the person for the longer period of time is the primary plan and the plan that covered
the person for the shorter period of time is the secondary plan.
(2) To determine the length of time a person has been covered under a plan, two
successive plans shall be treated as one if the covered person was eligible under
the second plan within twenty-four hours after coverage under the first plan ended.
(3) The start of a new plan does not include:
(a) A change in the amount or scope of a plan's benefits;
(b) A change in the entity that pays, provides, or administers the plan's benefits; or
(c) A change from one type of plan to another, such as, from a single employer
plan to a multiple employer plan.
(4) The person's length of time covered under a plan is measured from the person's
first date of coverage under that plan. If that date is not readily available for a group
plan, the date the person first became a member of the group shall be used as the
date from which to determine the length of time the person's coverage under the
present plan has been in force.
f. If none of the preceding rules determines the order of benefits, the allowable expenses
shall be shared equally between the plans.
History: Effective January 1, 2006.
General Authority: NDCC 26.1-36-38
Law Implemented: NDCC 26.1-36-10, 26.1-36-29, 26.1-41-13
### § 45-08-01.2-05. Procedure to be followed by secondary plan to calculate benefits and pay a

claim.
In determining the amount to be paid by the secondary plan on a claim, should the plan wish to
coordinate benefits, the secondary plan shall calculate the benefits it would have paid on the claim in
the absence of other health care coverage and apply that calculated amount to any allowable expense
under its plan that is unpaid by the primary plan. The secondary plan may reduce its payment by the
amount so that, when combined with the amount paid by the primary plan, the total benefits paid or
provided by all plans for the claim do not exceed one hundred percent of the total allowable expense
for that claim. In addition, the secondary plan shall credit to its plan deductible any amounts it would
have credited to its deductible in the absence of other health care coverage.
History: Effective January 1, 2006.
General Authority: NDCC 26.1-36-38

Law Implemented: NDCC 26.1-36-10, 26.1-36-29, 26.1-41-13
### § 45-08-01.2-06. Miscellaneous provisions.

1. A secondary plan that provides benefits in the form of services may recover the reasonable
cash value of the services from the primary plan, to the extent that benefits for the services
are covered by the primary plan and have not already been paid or provided by the primary
plan. Nothing in this provision shall be interpreted to require a plan to reimburse a covered
person in cash for the value of services provided by a plan that provides benefits in the form of
services.
2. a. A plan with order of benefits determination rules that comply with this chapter (complying
plan) may coordinate its benefits with a plan that is "excess" or "always secondary" or
that uses order of benefits determination rules that are inconsistent with those contained
in this chapter (noncomplying plan) on the following basis:
(1) If the complying plan is the primary plan, it shall pay or provide its benefits first;
(2) If the complying plan is the secondary plan, it shall pay or provide its benefits first,
but the amount of the benefits payable shall be determined as if the complying plan
were the secondary plan. In such a situation, the payment shall be the limit of the
complying plan's liability; and
(3) If the noncomplying plan does not provide the information needed by the complying
plan to determine its benefits within a reasonable time after it is requested to do so,
the complying plan shall assume that the benefits of the noncomplying plan are
identical to its own, and shall pay its benefits accordingly. If within two years of
payment the complying plan receives information as to the actual benefits of the
noncomplying plan, it shall adjust payments accordingly.
b. If the noncomplying plan reduces its benefits so that the covered person receives less in
benefits than the covered person would have received had the complying plan paid or
provided its benefits as the secondary plan and the noncomplying plan paid or provided
its benefits as the primary plan, and governing state law allows the right of subrogation
set forth below, then the complying plan shall advance to the covered person or on behalf
of the covered person an amount equal to the difference.
c. In no event shall the complying plan advance more than the complying plan would have
paid had it been the primary plan less any amount it previously paid for the same
expense or service. In consideration of the advance, the complying plan shall be
subrogated to all rights of the covered person against the noncomplying plan. The
advance by the complying plan shall also be without prejudice to any claim it may have
against a noncomplying plan in the absence of subrogation.
3. Coordination of benefits differs from subrogation. Provisions for one may be included in health
care benefits contracts without compelling the inclusion or exclusion of the other.
4. If the plans cannot agree on the order of benefits within thirty calendar days after the plans
have received all of the information needed to pay the claim, the plans shall immediately pay
the claim in equal shares and determine their relative liabilities following payment, except that
no plan shall be required to pay more than it would have paid had it been the primary plan.
History: Effective January 1, 2006.
General Authority: NDCC 26.1-36-38
Law Implemented: NDCC 26.1-36-10, 26.1-36-29, 26.1-41-13

### § 45-08-01.2-07. Effective date for existing contracts.

1. A contract that provides health care benefits and that was issued before the effective date of
this chapter shall be brought into compliance with this regulation by the later of:
a. The next anniversary date or renewal date of the contract;
b. Twelve months following the effective date of these rules; or
c. The expiration of any applicable collectively bargained contract pursuant to which it was
written.
2. For the transition period between the adoption of this chapter and the time frame for which
plans are to be in compliance pursuant to subsection 1, a plan that is subject to the prior
coordination of benefits requirements shall not be considered a noncomplying plan by a plan
subject to the new coordination of benefits requirements and if there is a conflict between the
prior coordination of benefits requirements under the prior regulation and the new coordination
of benefits requirements under the amended regulation, the prior coordination of benefits
requirements shall apply.
History: Effective January 1, 2006.
General Authority: NDCC 26.1-36-38
Law Implemented: NDCC 26.1-36-10, 26.1-36-29, 26.1-41-13

The coordination of benefits (COB) provision applies when a person has health care coverage under
more than one plan. Plan is defined below.
The order of benefits determination rules govern the order in which each plan will pay a claim for
benefits. The plan that pays first is called the primary plan. The primary plan must pay benefits in
accordance with its policy terms without regard to the possibility that another plan may cover some
expenses. The plan that pays after the primary plan is the secondary plan. The secondary plan may
reduce the benefits it pays so that payments from all plans does not exceed 100% of the total allowable
expense.
A. A plan is any of the following that provides benefits or services for medical or dental care or
treatment. If separate contracts are used to provide coordinated coverage for members of a
group, the separate contracts are considered parts of the same plan and there is no COB
among those separate contracts.
(1) Plan includes: group and nongroup insurance contracts, health maintenance organization
(HMO) contracts, closed panel plans or other forms of group or group type coverage
(whether insured or uninsured); medical care components of long-term care contracts,
such as skilled nursing care; medical benefits under group or individual automobile
contracts; and Medicare or any other federal governmental plan, as permitted by law.
(2) Plan does not include: hospital indemnity coverage or other fixed indemnity coverage;
accident-only coverage; specified disease or specified accident coverage; limited benefit
health coverage, as defined by state law; school accident-type coverage; benefits for
nonmedical components of long-term care policies; Medicare supplement policies;
Medicare policies; or coverage under other federal governmental plans, unless permitted
by law.
Each contract for coverage under (1) or (2) is a separate plan. If a plan has two parts and
COB rules apply only to one of the two, each of the parts is treated as a separate plan.
B. This plan means, in a COB provision, the part of the contract providing the health care
benefits to which the COB provision applies and which may be reduced because of the
benefits of other plans. Any other part of the contract providing health care benefits is
separate from this plan. A contract may apply one COB provision to certain benefits, such as
dental benefits, coordinating only with similar benefits, and may apply another COB provision
to coordinate other benefits.
C. The order of benefit determination rules determine whether this plan is a primary plan or
secondary plan when the person has health care coverage under more than one plan.
When this plan is primary, it determines payment for its benefits first before those of any other
plan without considering any other plan's benefits. When this plan is secondary, it determines
its benefits after those of another plan and may reduce the benefits it pays so that all plan
benefits do not exceed 100% of the total allowable expense.
D. Allowable expense is a health care expense, including deductibles, coinsurance and
copayments, that is covered at least in part by any plan covering the person. When a plan
provides benefits in the form of services, the reasonable cash value of each service will be

considered an allowable expense and a benefit paid. An expense that is not covered by any
plan covering the person is not an allowable expense. In addition, any expense that a provider
by law or in accordance with a contractual agreement is prohibited from charging a covered
person is not an allowable expense.
The following are examples of expenses that are not allowable expenses:
(1) The difference between the cost of a semiprivate hospital room and a private hospital
room is not an allowable expense, unless one of the plans provides coverage for private
hospital room expenses.
(2) If a person is covered by two or more plans that compute their benefit payments on the
basis of usual and customary fees or relative value schedule reimbursement
methodology or other similar reimbursement methodology, any amount in excess of the
highest reimbursement amount for a specific benefit is not an allowable expense.
(3) If a person is covered by two or more plans that provide benefits or services on the basis
of negotiated fees, an amount in excess of the highest of the negotiated fees is not an
allowable expense.
(4) If a person is covered by one plan that calculates its benefits or services on the basis of
usual and customary fees or relative value schedule reimbursement methodology or
other similar reimbursement methodology and another plan that provides its benefits or
services on the basis of negotiated fees, the primary plan's payment arrangement shall
be the allowable expense for all plans. However, if the provider has contracted with the
secondary plan to provide the benefit or service for a specific negotiated fee or payment
amount that is different than the primary plan's payment arrangement and if the
provider's contract permits, the negotiated fee or payment shall be the allowable expense
used by the secondary plan to determine its benefits.
(5) The amount of any benefit reduction by the primary plan because a covered person has
failed to comply with the plan provisions is not an allowable expense. Examples of these
types of plan provisions include second surgical opinions, precertification of admissions,
and preferred provider arrangements.
E. Closed panel plan is a plan that provides health care benefits to covered persons primarily in
the form of services through a panel of providers that have contracted with or are employed by
the plan, and that excludes coverage for services provided by other providers, except in cases
of emergency or referral by a panel member.
F. Custodial parent is the parent awarded custody by a court decree or, in the absence of a court
decree, is the parent with whom the child resides more than one-half of the calendar year
excluding any temporary visitation.
When a person is covered by two or more plans, the rules for determining the order of benefits
payments are as follows:
A. The primary plan pays or provides its benefits according to its terms of coverage and without
regard to the benefits of under any other plan.
B. (1) Except as provided in paragraph 2, a plan that does not contain a coordination of
benefits provision that is consistent with this regulation is always primary unless the
provisions of both plans state that the complying plan is primary.

(2) Coverage that is obtained by virtue of membership in a group that is designed to
supplement a part of a basic package of benefits and provides that this supplementary
coverage shall be excess to any other parts of the plan provided by the contractholder.
Examples of these types of situations are major medical coverages that are
superimposed over base plan hospital and surgical benefits, and insurance type
coverages that are written in connection with a closed panel plan to provide
out-of-network benefits.
C. A plan may consider the benefits paid or provided by another plan in calculating payment of its
benefits only when it is secondary to that other plan.
D. Each plan determines its order of benefits using the first of the following rules that apply:
(1) Nondependent or dependent. The plan that covers the person other than as a
dependent, for example as an employee, member, policyholder, subscriber, or retiree, is
the primary plan and the plan that covers the person as a dependent is the secondary
plan. However, if the person is a Medicare beneficiary and, as a result of federal law,
Medicare is secondary to the plan covering the person as a dependent; and primary to
the plan covering the person as other than a dependent (e.g., a retired employee); then
the order of benefits between the two plans is reversed so that the plan covering the
person as an employee, member, policyholder, subscriber, or retiree is the secondary
plan and the other plan is the primary plan.
(2) Dependent child covered under more than one plan. Unless there is a court decree
stating otherwise, when a dependent child is covered by more than one plan the order of
benefits is determined as follows:
(a) For a dependent child whose parents are married or are living together, whether or
not they have ever been married:
• The plan of the parent whose birthday falls earlier in the calendar year is the
primary plan; or
• If both parents have the same birthday, the plan that has covered the parent
the longest is the primary plan.
(b) For a dependent child whose parents are divorced or separated or not living
together, whether or not they have ever been married:
(i) If a court decree states that one of the parents is responsible for the dependent
child's health care expenses or health care coverage and the plan of that
parent has actual knowledge of those terms, that plan is primary. This rule
applies to plan years commencing after the plan is given notice of the court
decree;
(ii) If a court decree states that both parents are responsible for the dependent
child's health care expenses or health care coverage, the provisions of
subparagraph a above shall determine the order of benefits;
(iii) If a court decree states that the parents have joint custody without specifying
that one parent has responsibility for the health care expenses or health care
coverage of the dependent child, the provisions of subparagraph a above shall
determine the order of benefits; or
(iv) If there is no court decree allocating responsibility for the dependent child's
health care expenses or health care coverage, the order of benefits for the
child are as follows:

• The plan covering the custodial parent;
• The plan covering the spouse of the custodial parent;
• The plan covering the noncustodial parent; and then
• The plan covering the spouse of the noncustodial parent.
(c) For a dependent child covered under more than one plan of individuals who are the
parents of the child, the provisions of subparagraph a or b above shall determine
the order of benefits as if those individuals were the parents of the child.
(3) Active employee or retired or laid-off employee. The plan that covers a person is an
active employee, that is, an employee who is neither laid off nor retired, is the primary
plan. The plan covering that same person as a retired or laid-off employee is the
secondary plan. The same would hold true if a person is a dependent of an active
employee and that same person is a dependent of a retired or laid-off employee. If the
other plan does not have this rule, and as a result, the plans do not agree on the order of
benefits, this rule is ignored. This rule does not apply if the rule labeled D(1) can
determine the order of benefits.
(4) COBRA or state continuation coverage. If a person whose coverage is provided pursuant
to COBRA or under a right of continuation provided by state or other federal law is
covered under another plan, the plan covering the person as an employee, member,
subscriber, or retiree or covering the person as a dependent of an employee, member,
subscriber, or retiree is the primary plan and the COBRA or state or other federal
continuation coverage is the secondary plan. If the other plan does not have this rule,
and as a result, the plans do not agree on the order of benefits, this rule is ignored. This
rule does not apply if the rule labeled D(1) can determine the order of benefits.
(5) Longer or shorter length of coverage. The plan that covered the person as an employee,
member, policyholder, subscriber, or retiree longer is the primary plan and the plan that
covered the person the shorter period of time is the secondary plan.
(6) If the preceding rules do not determine the order of benefits, the allowable expenses
shall be shared equally between the plans meeting the definition of plan. In addition, this
plan will not pay more than it would have paid had it been the primary plan.
A. When this plan is secondary, it may reduce its benefits so that the total benefits paid or
provided by all plans during a plan year are not more than the total allowable expenses. In
determining the amount to be paid for any claim, the secondary plan will calculate the benefits
it would have paid in the absence of other health care coverage and apply that calculated
amount to any allowable expense under its plan that is unpaid by the primary plan. The
secondary plan may then reduce its payment by the amount so that, when combined with the
amount paid by the primary plan, the total benefits paid or provided by all plans for the claim
do not exceed the total allowable expense for that claim. In addition, the secondary plan shall
credit to its plan deductible any amounts it would have credited to its deductible in the
absence of other health care coverage.
B. If a covered person is enrolled in two or more closed panel plans and if, for any reason,
including the provision of service by a nonpanel provider, benefits are not payable by one
closed panel plan, COB shall not apply between that plan and other closed panel plans.

Certain facts about health care coverage and services are needed to apply these COB rules and to
determine benefits payable under this plan and other plans. [Organization responsibility for COB
administration] may get the facts it needs from or give them to other organizations or persons for the
purpose of applying these rules and determining benefits payable under this plan and other plans
covering the person claiming benefits. [Organization responsibility for COB administration] need not tell,
or get the consent of, any person to do this. Each person claiming benefits under this plan must give
[organization responsibility for COB administration] any facts it needs to apply those rules and
determine benefits payable.
A payment made under another plan may include an amount that should have been paid under this
plan. If it does, [organization responsibility for COB administration] may pay that amount to the
organization that made that payment. That amount will then be treated as though it were a benefit paid
under this plan. [Organization responsibility for COB administration] will not have to pay that amount
again. The term "payment made" includes providing benefits in the form of services, in which case
"payment made" means the reasonable cash value of the benefits provided in the form of services.
If the amount of the payments made by [organization responsibility for COB administration] is more
than it should have paid under this COB provision, it may recover the excess from one or more of the
persons it has paid or for whom it has paid; or any other person or organization that may be
responsible for the benefits or services provided for the covered person. The "amount of the payments
made" includes the reasonable cash value of any benefits provided in the form of services.

This is a summary of only a few of the provisions of your health plan to help you understand
coordination of benefits, which can be very complicated. This is not a complete description of all of
the coordination rules and procedures, and does not change or replace the language contained in
your insurance contract, which determines your benefits.
Double Coverage
It is common for family members to be covered by more than one health care plan. This happens,
for example, when a husband and wife both work and choose to have family coverage through both
employers.
When you are covered by more than one health plan, state law permits your insurers to follow a
procedure called "coordination of benefits" to determine how much each should pay when you have a
claim. The goal is to make sure that the combined payments of all plans do not add up to more than
your covered health care expenses.
Coordination of benefits (COB) is complicated, and covers a wide variety of circumstances. This is
only an outline of some of the most common ones. If your situation is not described, read your evidence
of coverage or contact your state insurance department.
Primary or Secondary?
You will be asked to identify all the plans that cover members of your family. We need this
information to determine whether we are the "primary" or "secondary" benefit payer. The primary plan
always pays first when you have a claim.
Any plan that does not contain your state's COB rules will always be primary.
When This Plan is Primary
If you or a family member are covered under another plan in addition to this one, we will be primary
when:
Your Own Expenses
• The claim is for your own health care expenses, unless you are covered by Medicare and both you
and your spouse are retired.
Your Spouse's Expenses
•The claim is for your spouse, who is covered by Medicare, and you are not both retired.
Your Child's Expenses
•The claim is for the health care expenses of your child who is covered by this plan and
•You are married and your birthday is earlier in the year than your spouse's or you are living with
another individual, regardless of whether or not you have ever been married to that

individual, and your birthday is earlier than that other individual's birthday. This is known
as the "birthday rule";
or
• You are separated or divorced and you have informed us of a court decree that makes you
responsible for the child's health care expenses;
or
• There is no court decree, but you have custody of the child.
Other Situations
We will be primary when any other provisions of state or federal law require us to be.
How We Pay Claims When We Are Primary
When we are the primary plan, we will pay the benefits in accordance with the terms of your
contract, just as if you had no other health care coverage under any other plan.
How We Pay Claims When We Are Secondary
We will be secondary whenever the rules do not require us to be primary.
How We Pay Claims When We Are Secondary
When we are the secondary plan, we do not pay until after the primary plan has paid its benefits.
We will then pay part or all of the allowable expenses left unpaid, as explained below. An "allowable
expense" is a health care expense covered by one of the plans, including copayments, coinsurance,
and deductibles.
• If there is a difference between the amount the plans allow, we will base our payment on the higher
amount. However, if the primary plan has a contract with the provider, our combined payments
will not be more than the amount called for in our contract or the amount called for in the
contract of the primary plan, whichever is higher. Health maintenance organizations (HMOs)
and preferred provider organizations (PPOs) usually have contracts with their providers.
• We will determine our payment by subtracting the amount the primary plan paid from the amount we
would have paid if we had been primary. We may reduce our payment by any amount so that,
when combined with the amount paid by the primary plan, the total benefits paid do not
exceed the total allowable expense for your claim. We will credit any amount we would have
paid in the absence of your other health care coverage toward our own plan deductible.
• If the primary plan covers similar kinds of health care expenses, but allows expenses that we do not
cover, we may pay for those expenses.
• We will not pay an amount the primary plan did not cover because you did not follow its rules and
procedures. For example, if your plan has reduced its benefit because you did not obtain
precertification, as required by that plan, we will not pay the amount of the reduction, because
it is not an allowable expense.
Questions About Coordination of Benefits?
Contact Your State Insurance Department
