How Coordination of Benefits (COB) Works in Dental Insurance: Understanding the Rules and Order of Benefits

Coordination of Benefits (COB) determines the order in which healthcare claims are paid, known as primary, secondary, tertiary, quaternary, etc. In some cases, a patient can have four plans – for example, a 24-year-old patient who is covered under her employer’s plan, spouse’s plan, father’s plan, and mother’s plan. The Affordable Care Act (ACA) allows dependents up to age 26 to be eligible for healthcare benefits under the parent’s plan, which is why some patients can be covered under multiple plans. While the ACA rule requirement to cover dependents up to the age of 26 is specific to health insurance plans, many employers include dental coverage to simplify the benefits package.

COB rules ensure that the total benefit paid does not exceed the total amount of fees billed, and it is important to determine the order of benefits prior to submitting any claims to prevent any overpayment. Each plan has its own established COB rules, but there are governing bodies that provide guidance. State laws apply to fully insured plans sold in that state, and these plans follow any established COB rules of the state in which the plan was sold. Self-funded or federal plans do not follow state insurance laws; they follow federal law or ERISA rules. This is where COB can be confusing because each plan establishes its own rules. It’s essential to understand each plan’s COB rules to ensure proper billing and avoid overpayment.

The National Association of Insurance Commissioners (NAIC) has published a recommended COB model, which most states have adopted as a guideline when establishing their rules, but there is no requirement to adopt these rules. Therefore, there is no clear standard that applies to all dental plans across the board. Some common NAIC recommended COB models when determining the order of benefits are the active employee or retired or laid-off employee, dependent children whose parents are divorced or separated, and COBRA or state continuation coverage.

There are several common COB models used to determine the order of benefits. For example, for a dependent child whose parents are divorced or separated, the order of benefits depends on whether a court decree assigns responsibility for the child’s healthcare expenses. If a court decree exists, the plan covering the parent with responsibility is the primary plan. If there is no court decree, the order of benefits is typically the plan covering the custodial parent, followed by the plan covering the spouse of the custodial parent, then the plan covering the non-custodial parent, and finally, the plan covering the spouse of the non-custodial parent.

COB is important because it prevents overpayment and ensures that the appropriate plan pays for the claim. Providers must determine the order of benefits to ensure that the claims are paid correctly. Understanding COB rules is important for providers and patients alike to avoid confusion and prevent overpayment.

Tidewater Dental Consulting offers a comprehensive hands-on workshop to ensure your team is properly processing claims and payments when multiple plans are involved. Often PPO adjustments are improperly calculated in COB scenarios resulting in loss of revenue for your practice. Contact us to learn more about our workshops.