Secondary health insurance plans provide coverage similar to that of plans

Navigating the world of health insurance can be challenging, especially if you’ve found yourself with more than one health insurance plan to figure out. While most Americans only have one plan, known as “primary” insurance, some individuals will have an additional plan, known as “secondary” insurance.

While it sounds confusing, having dual coverage like this is perfectly legal—you just need to coordinate your two benefits correctly to make sure your medical expenses are being covered compliantly.

If you’re new to dual insurance, you’ve come to the right place! This article will cover why someone might have two health insurance plans, how to coordinate the two plans, and how to determine which plan is primary and which is secondary.

Find out how you can save money on your health insurance with a health reimbursement arrangement (HRA)

Why would someone have two health insurance plans?

First, let’s talk about when someone might have two health insurance plans in the first place. There are several scenarios where this might happen. For example, if you’re married and you and your spouse both have a group health insurance plan from your employer, you might be covered by your plan and listed as a dependent on your spouse’s plan.

Dual insurance is also common for students, who might be enrolled in a student or university medical plan, but are also younger than 26 and are still allowed to be covered under their parents’ insurance plan.

Children of divorced parents might also have separate health plans—one from each parent.

Another example is for those who qualify for Medicaid but have their own insurance plan to supplement their Medicaid coverage. This can be an individual plan purchased on the Marketplace or an employer-sponsored health plan.

How do two health insurance plans work together?

When you have two health insurance plans, this doesn’t mean that you’ll be fully covered twice by each medical plan. Instead, one is assigned as your primary plan, while the other acts as your secondary health insurance plan. That means the total amount your two plans will pay for your health expenses will never exceed 100% of the cost of those expenses.

Coordination of benefits is the process that decides which insurance pays first for a claim, which is why it’s important to understand the difference between primary and secondary insurance. Let’s dive into how these two plans differ below.

Primary insurance

Your primary plan is your main insurance that will cover your medical care first before your secondary insurance. For example, when you see the doctor or need to purchase prescription drugs, your primary payer will cover the bills up to its coverage limits. With a primary health plan, you may owe cost-sharing as well.

Secondary insurance

Your secondary insurance plan typically only kicks in after your primary insurance has reached its coverage limits. If there’s anything left to pay after your primary insurance covers its portion of your healthcare expenses, this is when your secondary insurance will take effect.

How do I determine which insurance is primary and which is secondary?

When it comes to deciding which plan is your primary policy and which is your secondary, you actually don’t get to choose. Insurance carriers will provide you with coverage from your primary plan whenever you make a claim as if you had no secondary plan. Afterwards, your secondary insurance plan will kick in and cover the remaining amount.

Health insurance companies have specific rules about coordinating dual health plans based on your specific situation. This chart will help you understand which plan will be your primary and which will be your secondary:

What two benefits are you coordinating?

Primary coverage

Secondary coverage

A spouse’s employer-sponsored plan and your own employer-sponsored plan.

Your employer-sponsored plan.

Your spouse’s employer-sponsored plan.

A student or employer-sponsored plan and a parent’s plan.

Your student or employer-sponsored plan.

Your parent’s plan.

Two parent plans.

The parent whose birthday is the first in a calendar year. If the parents are divorced, the parent’s plan with custody of the child will be primary.

The parent whose birthday is second in a calendar year or, in cases of divorce, the parent who doesn’t have custody of the child.

Medicaid coverage and your own health plan.

Your health plan.

Medicaid.

Pros and cons of having multiple health insurance policies

There are certain advantages to having more than one health plan. Multiple medical policies offer double benefits which may mean more help with medical expenses since two plans are used to cover healthcare costs.

Additionally, if you have coverage through your parents’ plan or your spouse’s plan, in addition to your own employer-sponsored health plan, you don’t have to worry about losing health insurance if you lose your job.

However, remember that combined health coverage can’t exceed 100% of health costs, and you’ll still be responsible for any cost-sharing under plan rules. This can potentially include both plans’ monthly premiums and applicable deductibles, so the extra plan costs can rack up over time.

Having two separate plans can also make the claims process more difficult, especially if you have claims with one or both of your insurance companies.

If the cost of possibly paying more in cost-sharing is worth the extra coverage based on your current and future healthcare needs, then having dual insurance coverage could be the right choice for you.

Do I have to pay anything out-of-pocket if I have two health insurance plans?

Your primary and secondary insurance will cover expenses up to their plan limits. After the secondary insurance has paid, you may still have an amount left over. Therefore, you may still have out-of-pocket costs even with two separate insurance plans.

As mentioned above, having two insurance plans also may mean paying additional premiums and dealing with two separate deductibles. If you’re worried about potential out-of-pocket costs, you have some options.

That’s where health reimbursement arrangements (HRAs) come in handy as an additional benefit. Through an HRA, you can get your insurance premiums, annual deductibles, and other qualifying out-of-pocket expenses reimbursed, tax-free, up to a monthly allowance amount.

While traditional group plans restrict employees' medical coverage options, network providers, and set insurance premiums, a qualified small employer HRA (QSEHRA) or an individual coverage HRA (ICHRA) allows you to choose an individual insurance plan that works for you.

If your employer is offering an integrated HRA, you can use it as a supplement for your group health insurance plan to cover expenses like out-of-pocket medical costs not fully covered by the plan.

With HRAs, each employee can use their health benefit to purchase the best items and services for their personal health, budget, and family situation.

Conclusion

Whether you’re a young adult still on a parent’s plan, you qualify for Medicaid, or you and your spouse have two health insurance plans, there are many reasons why someone might be covered by two different health insurance plans.

If you decide to stick with double coverage, it’s essential to understand how your plans work together to get the most bang for your buck. Coordinating your two health insurance policies may be tricky at first, but by following the guidelines in this article, you’ll be well on your way to managing two plans like a pro.

This article was originally published on December 29, 2021. It was last updated on September 6, 2022.

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