Current through Register Vol. 46, No. 39, September 25, 2024
(a) This
section is intended to establish uniformity in the permissive use of
overinsurance provisions and to avoid claim delays and misunderstandings that
could otherwise result from the use of inconsistent or incompatible provisions
among plans.
(b) A coordination of
benefits (COB) provision is one that is intended to avoid claims payment delays
and duplication of benefits when a person is covered by two or more plans
providing benefits or services for medical, dental or other care or treatment.
It avoids claims payment delays by establishing an order in which plans pay
their claims and providing the authority for the orderly transfer of
information needed to pay claims promptly. It avoids duplication of benefits by
permitting a reduction of the benefits of a plan when, by the rules established
by this section, it does not have to pay its benefits first.
(c) This section permits, but does not
require, plans to include COB provisions.
(d) If a plan includes a COB provision, it
must be consistent with this section. A plan that does not include such a
provision may not take the benefits of another plan into account when it
determines its benefits. There are two exceptions:
(1) a contract holder's coverage that is
designed to supplement a part of a basic package of benefits may provide that
the supplementary coverage shall be excess to any other parts of the plan
provided by the contract holder; and
(2) any noncontributory group or blanket
insurance coverage which is in force on January 1, 1987 which provides excess
major medical benefits intended to supplement any basic benefits on a covered
person may continue to be excess to such basic benefits.
(e) Plan--definition.
(1) A plan is a form of coverage written on
an expense-incurred basis with which coordination is allowed. The definition of
plan in a contract must state the types of coverage which will be considered in
applying the COB provision of that contract.
(2) This section uses the term plan. However,
a contract may, instead, use program or some other term.
(3) Plan shall not include individual or
family:
(i) insurance contracts;
(ii) direct-payment subscriber
contracts;
(iii) coverage through
health maintenance organizations (HMO's); or
(iv) coverage under other prepayment, group
practice and individual practice plans.
(4) Plan may include:
(i) group insurance and group or group
remittance subscriber contracts;
(ii) uninsured arrangements of group
coverage;
(iii) group coverage
through HMO's and other prepayment, group practice and individual practice
plans; and
(iv) blanket contracts,
except as stated in paragraph (7) of this subdivision.
(5) Plan may include the medical benefits
coverage in group and individual mandatory automobile "no-fault" and
traditional mandatory automobile "fault" type contracts.
(6) Plan may include Medicare or other
governmental benefits. That part of the definition of plan may be limited to
the hospital, medical and surgical benefits of the governmental program.
However, plan shall not include a State plan under Medicaid, and shall not
include a law or plan when, by law, its benefits are excess to those of any
private insurance plan or other nongovernmental plan.
(7) Plan shall not include blanket school
accident coverages or such coverages issued to a substantially similar group as
defined in section
52.70(d)(6) of
this Part where the policyholder pays the premium.
(f) This plan--definition.
(1) In a COB provision, the term this plan
refers to the part of the contract providing the health care benefits to which
the COB provision applies and which may be reduced on account of the benefits
of other plans. Any other part of the contract providing health care benefits
is separate from this plan.
(2) A
contract may apply one COB provision to certain of its benefits (such as dental
benefits), coordinating only with like benefits, and may apply other separate
COB provisions to coordinate other benefits.
(g) Primary plan--definition.
(1) A primary plan is one whose benefits for
a person's health care coverage must be determined without taking the existence
of any other plan into consideration. A plan is a primary plan if either:
(i) the plan either has no order of benefit
determination rules, or it has rules which differ from those permitted by this
section; or
(ii) all plans which
cover the person use the order of benefit determination rules required by this
section and under those rules the plan determines its benefits first.
(2) There may be more than one
primary plan (for example, two plans which have no order of benefit
determination rules).
(h) Secondary plan--definiton. A secondary
plan is one which is not a primary plan. If a person is covered by more than
one secondary plan, the order of benefit determination rules of this section
decide the order in which their benefits are determined in relation to each
other. The benefits of each secondary plan may take into consideration the
benefits of the primary plan or plans and the benefits of any other plan which,
under the rules of this section, has its benefits determined before those of
that secondary plan.
(i) Allowable
expense--definition.
(1) Allowable expense is
the necessary, reasonable, and customary item of expense for health care, when
the item of expense is covered at least in part under any of the plans
involved, except where a statute requires a different definition. However,
items of expense under coverages such as dental care, vision care, prescription
drug or hearing aid programs may be excluded from the definition of allowable
expense. A plan which provides benefits only for any such items of expense may
limit its definition of allowable expenses to like items of expense.
(2) When a plan provides benefits in the form
of services, the reasonable cash value of each service will be considered as
both an allowable expense and a benefit paid.
(3) The difference between the cost of a
private hospital room and the cost of a semiprivate hospital room is not
considered an allowable expense under the above definition unless the patient's
stay in a private hospital room is medically necessary in terms of generally
accepted medical practice.
(4) When
COB is restricted in its use to specific coverage in a contract (for example,
major medical or dental), the definition of allowable expense must include the
corresponding expenses or services to which COB applies.
(j) Claim -- definition.
(1) A claim is a request that benefits of a
plan be provided or paid. The benefits claimed may be in the form of:
(i) services (including supplies);
(ii) payment for all or a portion of the
expenses incurred; or
(iii) a
combination of subparagraphs (i) and (ii) of this paragraph.
(k) Claim determination
period -- definition.
(1) A claim
determination period is the period of time, which must not be less than 12
consecutive months, over which allowable expenses are compared with total
benefits payable in the absence of COB, to determine:
(i) whether overinsurance exists;
and
(ii) how much each plan will
pay or provide.
(2) A
claim determination period is usually a calendar year, but a plan may use some
other period of time that fits the coverage of the contract. A person may be
covered by a plan during a portion of a claim determination period if that
person's coverage starts or ends during the claim determination
period.
(3) As each claim is
submitted, each plan is to determine its liability and pay or provide benefits
based upon allowable expenses incurred to that point in the claim determination
period. But that determination is subject to adjustment as later allowable
expenses are incurred in the same claim determination period.
(l) A group contract may not
reduce benefits on the basis that:
(1)
another plan exists;
(2) except
with respect to part B of Medicare, that person is or could have been covered
under another plan; or
(3) a person
has elected an option under another plan providing a lower level of benefits
than another option which could have been elected.
(m) No plan may contain a provision that its
benefits are excess or always secondary to any plan except in accordance with
this subdivision or subdivision (d) of this section. A contract as described in
paragraph (7) of subdivision (e) of this section or a blanket accident
insurance policy issued in accordance with General Business Law section 1015.11
may contain a provision that its benefits are excess or always secondary to any
plan.
(n) Order of benefit
determination rules.
(1) The primary plan must
pay or provide its benefits as if the secondary plan or plans did not exist. A
secondary plan may take the benefits of another plan into account only when,
under these rules, it is secondary to that other plan.
(2) When there is a basis for a claim under
more than one plan, a plan with a coordination of benefits provision complying
with this section is a secondary plan which has its benefits determined after
those of the other plan, unless the other plan has a COB provision complying
with this section in which event the order of benefit determination rules will
apply.
(3) The order of benefit
payments is determined using the first of the following rules which applies:
(i) the benefits of a plan which covers the
person as an employee, member or subscriber (that is, other than as a
dependent) are determined before those of a plan which covers the person as a
dependent;
(ii) except as stated in
subparagraph (iii) of this paragraph, when a plan and another plan cover the
same child as a dependent of different persons, called parents:
(a) the benefits of the plan of the parent
whose birthday falls earlier in a year are determined before those of the plan
of the parent whose birthday falls later in that year; but
(b) if both parents have the same birthday,
the benefits of the plan which covered the parent longer are determined before
those of the plan which covered the other parent for a shorter period of
time;
(c) if the other plan does
not have the rule described above, but instead has a rule based upon the gender
of the parent, and if, as a result, the plans do not agree on the order of
benefits, the rule in the other plan will determine the order of
benefits;
(d) the word birthday
refers only to month and day in a calendar year, not the year in which the
person was born;
(e) a contract
which includes COB and which is issued or renewed, or which has an anniversary
date on or after January 1, 1987 shall include the substance of this
subparagraph;
(iii) if
two or more plans cover a person as a dependent child of divorced or separated
parents, benefits for the child are determined in this order:
(a) first, the plan of the parent with
custody of the child;
(b) then, the
plan of the spouse of the parent with custody of the child;
(c) finally, the plan of the parent not
having custody of the child; and
(d) if the specific terms of a court decree
state that one of the parents is responsible for the health care expenses of
the child, and the entity obligated to pay or provide the benefits of the plan
of that parent has actual knowledge of those terms, the benefits of that plan
are determined first. This paragraph does not apply with respect to any claim
determination period or plan year during which any benefits are actually paid
or provided before the entity has that actual knowledge;
(iv) the benefits of a plan which covers a
person as an employee who is neither laid off nor retired (or as that
employee's dependent) are determined before those of a plan which covers that
person as a laid off or retired employee (or as that employee's dependent). If
the other plan does not have this rule, and if, as a result, the plans do not
agree on the order of benefits, this subparagraph is ignored;
(v) if none of the above rules determines the
order of benefits, the benefits of the plan which covered an employee, member
or subscriber longer are determined before those of the plan which covered that
person for the shorter time.
(a) To determine
the length of time a person has been covered under a plan, two plans shall be
treated as one if the claimant was eligible under the second within 24 hours
after the first ended. Thus, the start of a new plan does not include:
(1) a change in the amount or scope of a
plan's benefits;
(2) a change in
the entity which pays, provides or administers the plan's benefits;
or
(3) a change from one type of
plan to another (such as, from a single employer plan to that of a multiple
employer plan).
(b) The
claimant's length of time covered under a plan is measured from the claimant's
first date of coverage under that plan. If that date is not readily available,
the date the claimant first became a member of the group shall be used as the
date from which to determine the length of time the claimant's coverage under
the present plan has been in force.
(o) Reduction in a plan's benefits when it is
secondary.
(1) A secondary plan may reduce its
benefits in accordance with subparagraph (i), (ii) or (iii) of this paragraph,
or any version thereof which is more favorable to a covered person:
(i) a secondary plan may reduce its benefits
so that the total benefits paid or provided by all plans during a claim
determination period are not more than total allowable expenses. The amount by
which the secondary plan's benefits have been reduced shall be used by the
secondary plan to pay allowable expenses, not otherwise paid, which were
incurred during the claim determination period by the person for whom the claim
is made. As each claim is submitted, the secondary plan determines its
obligation to pay for allowable expenses based on all claims which were
submitted up to that point in time during the claim determination
period;
(ii) a secondary plan may
reduce its benefits so that the total benefits paid or provided by all plans
during a claim determination period are not more than a stated percentage, but
not less than 80 percent, of total allowable expenses. The amount by which the
secondary plan's benefits have been reduced shall be used by the secondary plan
to pay the stated percentage of allowable expenses, not otherwise paid, which
were incurred during the claim determination period by the person for whom the
claim is made. As each claim is submitted, the secondary plan determines its
obligations to pay for the stated percentage of allowable expenses based on all
claims which were submitted up to that point in time during the claim
determination period;
(iii) a
secondary plan may reduce its benefits by the amount of the benefits payable
under the other plans for the same expenses. This alternative may be used in a
plan only when, in the absence of COB, the benefits of the plan (excluding
benefits for dental care, vision care, prescription drug or hearing aid
programs) will, after any deductible, be:
(a)
not less than 50 percent of covered expenses:
(1) for the treatment of mental or nervous
disorders or alcoholism or drug abuse; or
(2) under cost containment provisions with
alternative benefits, such as those applicable to second surgical opinions,
precertification of hospital stays, etc.; and
(b) not less than 75 percent of other covered
expenses.
(2)
In order to utilize the reduction permitted in subparagraph (1)(ii) or (iii) of
this subdivision, the following conditions must be met:
(i) the plan must provide prior notice to
employees or members that when it is secondary (that is, it determines benefits
after another plan) its benefits plus those of the primary plan will be less
than 100 percent of allowable expenses unless the primary plan, by itself,
provides benefits at 100 percent of allowable expenses;
(ii) when the plan is secondary, it must
provide a limit on the amount the employee, member or subscriber is required to
pay toward the expenses or services covered under the plan and for which the
plan is secondary. Such limit shall not exceed $2,000 for any covered person,
or $3,000 for any family in any claim determination period;
(iii) the plan must permit a person to be
enrolled for its health care coverage when that person's eligibility for health
care coverage under another plan ends for any reason, if such person is
eligible for coverage under the plan and such enrollment is made before the end
of the 31-day period immediately following the date when health care coverage
under the other plan ends or the end of any continuation period elected by or
for that person. This unrestricted enrollment is not required if a person
remains eligible for coverage under that other plan, or a plan which replaces
its, without interruption of that person's coverage; and
(iv) if a person is enrolled before the end
of the period, described in subparagraph (iii) of this paragraph, there shall
be no interruption of coverage. Requirements concerning active work of
employees, members or subscribers, or nonconfinement of dependents on the
effective date of coverage, shall not be applied by the plan. However, the plan
may apply the same requirements such as benefit restrictions, waiting periods,
and preexisting condition limitations that were in effect on the date set forth
in clause (a) or (b) of this subparagraph, whichever is applicable:
(a) if such person was not covered by the
plan, the date the person first became eligible for the plan's coverage;
or
(b) if such person was covered
by the plan, the date the person last became covered under the plan. Credit
shall be given under any preexisting condition or waiting period requirements
for the period of time from the applicable date described in clause (a) or (b)
of this subparagraph to the date the person actually enrolled in the plan
pursuant to this subparagraph.
(p) An insurer has the right to decide which
facts it needs in order to implement a COB provision. It may get needed facts
from or give them to any other organization or person. The insurer need not
tell or get the consent of, any person to do this except as required by article
25 of the New York General Business Law. Each person claiming benefits under a
plan must give the insurer any facts it needs to pay the claim.
(q) A payment made under one plan may include
an amount which should have been paid under another plan. If it does, the
insurer of the plan responsible for that payment may pay that amount to the
organization which made that payment. That amount will then be treated as
though it were a benefit paid under the plan which was primarily responsible
for that payment. The insurer will not have to pay that amount again. The term
payment made includes providing benefits in the form of services, in which case
payment made means reasonable cash value of the benefits provided in the form
of services.
(r) Right of recovery.
Subject to the provisions of section
217-2.2(c) of
this Title (Regulation No. 178).
(1) If the
amount of the payments made by an insurer is more than it should have paid
under its COB provision, it may recover the excess from one or more of:
(i) the persons it has paid or for whom it
has paid;
(ii) insurance companies;
or
(iii) other
organizations.
(2) A
secondary plan which provides benefits in the form of services may recover the
reasonable cash value of providing the services from the primary plan, to the
extent that benefits for the services are covered by the primary plan and have
not already been paid or provided by the primary plan. Nothing in this
subdivision shall be interpreted to require a plan to reimburse a covered
person in cash for the value of services provided by a plan that provides
benefits in the form of services.
(s) A plan with order of benefit
determination rules which comply with this section (complying plan) may
coordinate its benefits with a plan which is excess or always secondary or
which uses order of benefit determination rules which are inconsistent with
those contained in this section (noncomplying plan) on the following basis:
(1) if the complying plan is the primary
plan, it shall pay or provide its benefits on a primary basis;
(2) if the complying plan is the secondary
plan, it shall, nevertheless, pay or provide its benefits first, but the amount
of the benefits payable shall be determined as if the complying plan were the
secondary plan. In such a situation, such payment shall be the limit of the
complying plan's liability; and
(3)
if the noncomplying plan does not provide the information needed by the
complying plan to determine its benefits within 30 days after it is requested
to do so, the complying plan shall assume that the benefits of the noncomplying
plan are identical to its own, and shall pay its benefits accordingly. However,
the complying plan must adjust any payments it makes based on such assumption
whenever information becomes available as to the actual benefits of the
noncomplying plan.
