How Secondary Health Insurance Works: Coordinating with Primary Plans

The majority of Americans (91.7%) now have health coverage, but a single health insurance plan is not necessarily enough for everyone. Some consumers have plans that do not cover all the health services they need or the specialists they want to see. Others have plans with high out-of-pocket costs that make it harder to access necessary care. 

Thankfully, those unable to get all the coverage they need can opt for a secondary insurance plan. Read on to learn what secondary insurance is, what it covers, and how you can secure one for your family.

What Is Secondary Health Insurance? 

Secondary health insurance is additional coverage that individuals can purchase alongside their primary health insurance. It is designed to supplement the benefits provided by the primary insurance plan. Secondary insurance typically pays for costs not covered or fully covered by primary insurance, such as deductibles, copayments, and out-of-pocket expenses. It provides an extra layer of financial protection and can help reduce the overall healthcare costs for the policyholder.

Secondary health insurance is not a specific type of plan. Instead, it describes any plan that pays claims after a person’s primary plan. Many types of health insurance can act as secondary health insurance, including privately purchased plans, employer-sponsored plans, Medicare, and Medicaid.

When One Health Insurance Policy Is Not Enough: Adding Secondary Insurance to Supplement Coverage 

There are many good reasons why consumers decide to enroll in a second health insurance policy. Having two policies helps consumers fill coverage gaps, lower their out-of-pocket medical expenses, and increase their choice of healthcare providers. It also serves as a backup for consumers concerned about losing their primary source of coverage. 

When you’re covered by multiple health insurance plans, your insurers work together to pay claims. The plans are designated as primary, secondary, and tertiary health insurance.

• Primary health insurance: Also known as the primary payer, your primary insurer is the plan that pays for your medical care first, up to its plan limits.
• Secondary health insurance: Also known as the secondary payer, it’s responsible for paying for some or all of the costs that the primary insurance plan did not cover.
• Tertiary health insurance: This is also known as the tertiary payer. In cases where a consumer has three policies, the tertiary insurance pays last.

How Does Secondary Health Insurance Work? 

Secondary health insurance complements a person’s other health insurance policy. The two policies work together to cover healthcare services and pay claims, which offers many potential benefits. 

Reasons to Have Secondary Health Insurance 

Consumers who already have health insurance coverage choose to enroll in a second policy for many reasons. Getting a second policy is a way to:

• Fill coverage gaps: Covered benefits vary from plan to plan, so consumers may gain access to additional services they need or want when they buy a second plan. 
• Reduce out-of-pocket expenses: A secondary plan can help pay for some or all of the costs not covered by the primary plan, such as copayments, coinsurance, and deductibles.
• Access additional providers: If the secondary plan covers doctors, specialists, and other healthcare providers that are not part of the primary plan’s network, members gain more options.
• Enhance coverage for dependents: Consumers whose primary insurance does not cover dependents may buy a secondary policy that covers their spouse or children. 
• Have backup coverage: A secondary policy provides additional security if the primary policy ends for one reason or another.

Coordination of Benefits

Coordination-of-benefits rules determine how multiple health insurance plans work together to pay claims. These rules exist to prevent insurers from paying for the same claim twice while allowing consumers to claim up to 100% of their eligible health expenses.

When you receive a covered health service, you’ll first submit the claim to your primary health insurance provider. Then, the secondary health insurance processes a claim for the remaining balance. 

The coordination of benefits is determined based on state and federal laws, so consumers with two plans cannot choose which plan is primary and which is secondary. For details about the coordination of benefits, check your plan’s policy documents or ask your insurers.

Types of Secondary Health Insurance 

Many different types of health insurance can act as secondary coverage. Some common options to consider include employer-sponsored insurance, government-sponsored insurance, additional healthcare service insurance, and cost management coverage.

Employer-Sponsored Insurance 

Employer-sponsored insurance, also known as a group health plan, is coverage a company offers to its employees and their dependents. It’s a common workplace benefit; as of March 2022, 70% of workers in the private sector had access to a group health plan.

A job-based plan is typically the primary payer but may be the secondary payer in some situations. For example, if a consumer has both Medicare and a group health plan from a small employer (less than 20 employees), their work plan pays second. However, if that employer is part of a multi-employer group health plan, then the health plan would pay first and Medicare second.

Government-Sponsored Insurance 

The U.S. government offers several comprehensive health insurance programs for eligible people. Options that can act as a secondary health insurance plan are:

• Medicaid: A state-federal program that provides free or low-cost health coverage to low-income individuals and families. Covered services and eligibility rules vary from state to state.
• Medicare: A federal program that provides health coverage at a subsidized cost. It’s available to people 65 and older or under 65 with certain disabilities or health conditions. Remember that Medicare does not serve as supplementary insurance, though it does offer a variety of plans to supplement the out-of-pocket costs associated with Medicare, known as Medigap.
• TRICARE: A U.S. military health insurance program for active duty, retired, and National Guard/Reserve members and their families. It includes several different plan options. 

Additional Healthcare Service Insurance 

Consumers have the option to purchase standalone plans that cover specific health services. Some standard options include:

• Dental insurance: Covers preventive and routine dental services like checkups, cleanings, and fillings. Some plans also cover major dental procedures like root canals or crowns.
• Vision Insurance: Covers routine eye exams, eyeglass frames and lenses, and disposable contact lenses. Sometimes, vision insurance plans are bundled with dental plans.
• Critical illness insurance: Covers care related to specific critical illnesses listed in the policy, such as cancer, heart attack, or stroke.
• Prescription drug insurance: Covers outpatient prescription medications. Usually, standalone drug plans are meant to supplement Medicare, but there are some plans for people without Medicare.

Cost Management Coverages 

Cost management coverages pay a set amount for covered health events or services. Consumers use these benefits to help cover out-of-pocket costs left by their primary health insurance policy. Some options to consider include:

• Accidental death and dismemberment (AD&D) insurance: Pays a cash benefit if a person is seriously injured in a covered accident. If the accident is fatal, the benefit is paid to the insured person’s beneficiaries.
• Hospital indemnity insurance: Provides a cash benefit for each day a person is hospitalized. The amount varies from plan to plan.
• Fixed indemnity health insurance: Pays a fixed dollar amount per day or per medical service.

How Much Does Having Two Health Insurance Plans Cost? 

Consumers who choose to enroll in a second health insurance plan may be responsible for additional costs. Some essential costs to consider with secondary insurance include the following:

• Premiums: The monthly charges you pay in exchange for coverage. Some consumers may be eligible for a secondary plan with a low (or zero) monthly premium through government-sponsored insurance like Medicaid.
• Deductibles: The amount you pay out of pocket before your plan starts to pay. A low deductible means the secondary plan starts covering costs sooner.
• Copays: You pay a flat fee, such as $10 or $20 when you receive covered services.
• Coinsurance: Your share of the cost of a covered service after you’ve paid your deductible, such as 20%. 

When estimating the costs of carrying two insurance plans, consider how they work together to pay claims. The secondary policy may cover some or all of the out-of-pocket costs the primary policy leaves. Talk to a trusted agent to help determine a second policy’s effect on your budget.

How to Get Secondary Health Insurance 

The process of getting secondary health insurance is similar to that of getting primary health insurance, but there are some differences to keep in mind. Here’s how to get a secondary policy.

1. Assess Your Current Coverage

Review your current plan’s policy documents to understand its covered services, cost-sharing requirements, and limitations on coverage. Consider your current and upcoming health needs to identify any possible gaps in coverage. 

2. Research Secondary Coverage Options

Secondary coverage options range from plans that cover a single healthcare service to plans that offer comprehensive health coverage. Identify the types of plans available to you and determine which option best fills the gaps in your current coverage.

3. Understand the Coordination of Benefits

Consumers cannot choose which of their two health plans is considered secondary. Before applying for another plan, confirm it will pay second after your current coverage. 

4. Apply and Buy Your Policy

Follow your chosen plan’s instructions to apply. Carefully complete the application forms and be prepared to provide information about your current health coverage. After approval, pay your first month’s premium to activate your coverage.

Tips for Maximizing Your Secondary Health Insurance Benefits 

Having a secondary health insurance plan offers many potential benefits, from lower out-of-pocket costs to more choices for health care providers. To make the most of these benefits, remember to:

• Understand your coverages: Review the policy documents for both plans for details about covered services, costs, limitations, and network restrictions. Keep this information in mind when scheduling procedures or choosing providers.
• Keep track of your claims: Write down details about your appointments, tests, and procedures, and keep copies of bills and insurance claim forms. Review your claims for accuracy to ensure both policies paid their share.
• Get advice from a professional: Managing two health insurance plans can sometimes be challenging. Talk to a trusted agent for help navigating your coverage.

Putting It All Together 

Enrolling in a second health insurance plan is possible if your current coverage does not fully meet your needs. The two plans work together based on coordination-of-benefits rules to pay claims. 

Depending on your individual needs and preferences, there are many types of secondary health insurance to consider, from job-based coverage to privately purchased plans. For help choosing a plan, or to learn more about what secondary insurance is good for, talk to a trusted agent.