How Does Secondary Insurance Work?
First of all, what is secondary insurance? As the name implies, it is a type of insurance coverage that is provided in addition to any primary policy. Often times, it is used to supplement existing policies for the purpose of covering gaps in the coverage. It provides additional benefits after the primary coverage has completed its obligation according to the plan’s terms. Secondary insurance can be commonly found in health insurance, but it can also occur in various other types of insurance.
A common occurrence for when secondary plans exist is when an individual has coverage from his or her own group healthy policy as well as her spouse’s policy. Two common methods exist in determining which plan will supply primary coverage. One possible circumstance is that the plan, whether the individual’s or his or her spouse’s, which makes the claim will take precedence. Another circumstance is that the plan which the individual has been a member of the longest will be the primary plan.
A secondary insurance may be necessary for various other things. The most common purpose for a secondary insurance is to cover dental and optical plans. For example, since dental visits can be very costly when it is not covered by insurance, the existence of a secondary insurance plan is often considered as a way to cut costs. If you take into account families who have children, costs for dental visits are escalated even more. For this reason, secondary insurance plans are most essential to families with children.
Additionally, some individuals purchase cancer insurance as a secondary insurance policy. Although primary insurance provides for cancer treatment, there is a possibility that medical bills escalate to the point where the insured has a difficult time paying for his co-payments. Basically, cancer insurance can aide in paying the policyholder’s co-payments and other costs which the primary insurance cannot take care of.
How do primary and secondary plans coordinate?
Every plan states how the coverage can be used with other insurance plans. The policyholder should check the certificate of coverage of both insurances in order to know how to coordinate both plans. Typically, the primary insurer will pay for standard benefits. These are benefits which everyone gets. A secondary insurer will sometimes offer a higher level of benefits. They may allow for payment of services which are not available through the primary plan. In some cases, after the coverage of the primary plan has been exhausted, the primary insurer will coordinate with the secondary insurer to see if they are capable of covering the remaining costs.
Basically, the primary insurance is typically used to cover the immediate health needs. An advantage of purchasing a secondary insurance plan is that it should be able to take care of costs that the primary plan cannot cover.
When purchasing a secondary insurance plan, you should be sure that the plan includes what is not covered by your primary insurance plan. If redundancy exists, it will not make matters cost less. An individual must be extra careful to avoid such a circumstance.