# Wednesday, March 20, 2019
                 
Coordination of Benefits
It is not uncommon for Canadians to have more than one health insurance plan that offers extended health, dental, prescription drug and vision care coverage.

Almost all Canadians have coverage via their provincial, public healthcare plan. In addition, they often have some sort of private health insurance that covers costs that are not covered by their public healthcare.

Some Canadians are also fortunate enough to be on more than one private health insurance plan. This is especially true for couples, both of whom could be enrolled in some sort of employee benefits coverage that is obtained through their employer.

If a Canadian is covered by multiple health plans then the question arises: which plan pays out for eligible expenses first?

The answer to this question is determined by "co-ordination of benefits". Coordination of benefits determines how multiple plans pay out for eligible expenses, and understanding how this co-ordination works is important. Having coverage from more than one insurance plan means more coverage available to the insured..

Primary and Secondary Payers

A key concept to co-ordination of benefits is the idea of primary versus secondary payers.

As the name implies, the primary payer is the insurance plan that first pays out for eligible expenses incurred by the insured person. The secondary payer is the plan that covers expenses which the primary payer plan did not cover.

Note that a third payer is possible. For example, a Canadian who is covered by two private health insurance plans (the public healthcare plan would be the first payer, see below for more).

Public Healthcare and Private Health Insurance

In Canada, public healthcare plans such as OHIP, AHCIP and MSI are designated as primary payers. (For detailed information about Canadian public healthcare plans please see How Does Canadian Healthcare Work?).

Employee benefits and individual health and dental insurance plans are designed to be secondary payers to provincial healthcare coverage. Private health plan coverage only kicks in after public healthcare coverage is used up (if it exists at all). In addition, to qualify for private health insurance in Canada the applicant must be enrolled in a provincial healthcare plan. If a Canadian does not have provincial healthcare coverage (as is the case with returning expats who have been out of the country for awhile) then visitor to Canada insurance can be used to cover emergency medical costs until provincial healthcare coverage kicks in.

The exception to this is a special Ontario healthcare plan called OHIP+, which covers the costs of eligible prescription drugs for Ontario residents under the age of 25 who have valid OHIP coverage. The Ontario provincial government is making changes to OHIP+ (effective April 1, 2019), whereby OHIP+ now acts as the secondary payer if (and only if) the resident also has private health insurance coverage.  If an Ontario citizen under the age of 25 does not have private health insurance coverage then OHIP+ will cover the costs of those eligible prescription drugs.

Multiple Private Health Insurance Plans and Coordination of Benefits

There are a variety of situations whereby a Canadian resident may be covered by more than one private health insurance plan.

The following describes just some of these scenarios.

Married Spouses Each Have their Own Health Plan

Occurs when both you and your spouse have health insurance coverage (usually offered via employee benefits from the workplace). In this case your health insurance is the primary payer, while your spouse’s plan is designated as the secondary payer.1

You Have Two Health Insurance Plans

There are numerous Canadians who have more than one job. As a result, it is possible to have coverage from two different health plans. If this is the case then the plan that you have had the longest is considered the primary payer, while the newer plan is the second payer.

Children of Divorced Parents

Usually a child of divorced parents will be covered by the health insurance plan of the parent who has custody of the child.

If there is equal, joint custody then something called the "birthday rule" is applicable. According to the birthday rule the parent who has a birthday that occurs first during a calendar year is the primary payer, while the other parent is the secondary payer.

If the parent who is the primary payer remarries and their spouse has private health insurance then the step-parents plan is the secondary payer. If the other biological parent has a health plan then that coverage would be the third payer.

Note that a divorce settlement can dictate who the first and second payers are.

A Child of Married Parents Who Both Have a Health Plan

If a child is cover by both parent’s health plans then the birthday rule determines who is the primary payer (see above)2.

Dependent Has Their Own Plan and is Covered by a Parent’s Plan

If a child is in school full-time then they can be classified as a dependent under a parent’s plan until they reach the age of 26 (true for most but not all plans, the maximum age may vary).

If this applies to the child of an insured parent then the child’s plan is the primary payer, while the parent’s plan is the secondary payer.

Is It a Good Idea to Have Two Private Health Insurance Plans?

If you are not paying any premiums for these plans then it is a no brainer to have as much coverage as you can get. The more plans the merrier!

This gets trickier to answer when you are paying premiums for one or both of these plans. Look at the amount of premiums being paid and contrast that to the extra coverage you are getting. Does it make financial sense to stay on both plans?

When in doubt please talk to your insurance broker or agent. It is their job to make sure your benefits make sense.

Coordination of Benefits Tips

Use these tips to get the most out of your coverage using coordination of benefits:
  1. Know what each plan covers. Do not assume that the second payer plan will automatically cover expenses that the first payer does not. This can be an expensive mistake!
  2. When in doubt contact your insurance agent/broker. It is your agent’s job to know the ins and outs about coordination of benefits.
  3. Provide both primary and secondary payer details when going to a licensed medical practitioner who provides services that may be covered by your health insurance plans.

Conclusion

We hope you found this article about coordination of benefits helpful.

We’d love to hear from you if you have any questions or suggestions for us!
 

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