What Is Secondary Health Insurance? (2024)

Secondary health insurance occurs when you have multiple health insurance plans. These plans work together through a system called coordination of benefits, which decides which plan pays first and which one is considered secondary insurance.

Having two health insurance plans can improve coverage and help lower out-of-pocket costs, but it may also lead to double premiums and deductibles and make the health insurance claims process more confusing.

Who Can Have Secondary Insurance?

Secondary health insurance is available to anyone eligible for multiple health insurance plans.

Some examples of when you may be eligible for multiple health insurance plans are:

• You’re eligible for health insurance through your job and your spouse’s employer-sponsored health insurance plan.
• You’re under 26 and qualify for a health plan through your employer. You’re also on your parents’ health plan.
• You have both health insurance and a workers compensation insurance claim.
• You have a private health insurance plan and are eligible for coverage through a veterans administration (VA) plan, Medicare, Medicaid or another type of coverage.

How Does Secondary Insurance Work?

When you have multiple health insurance plans, the insurers work together to determine which plan pays first and which one pays second.

This process is called coordination of benefits, which dictates primary and secondary insurance. Coordination of benefits assures health insurance companies that they don’t pay for more than 100% of the total medical costs.

The primary and secondary insurance process works this way:

• The health care provider files the claim with the primary health insurance company. That health insurer reviews the claim and pays according to the plan’s benefits and coverage.
• The secondary health insurance then reviews the claim, what’s been paid by the primary insurer and contributes its portion of payment based on its benefits and coverage.
• The health care provider bills you for what’s remaining after the two insurance companies pay their share.

The primary and secondary insurer varies by type of health insurance, and your state and employer can also influence that process. These rules may vary by type of health plan, employer and state. Scenarios include:

• You’re covered by both your employer’s plan and your spouse’s employer’s plan: Your employer is typically considered primary; your spouse’s employer is secondary.
• Your child has coverage through both parents: The parent’s plan with the earlier birthday in the calendar year is considered primary. This is called the birthday rule. The other parent’s plan is secondary.
• A child under 26 has their own plan and is covered by a parent: Child’s plan is generally primary. Parent plan is secondary.

Types of Supplemental Health Insurance

Beyond health insurance, companies also offer supplemental insurance that goes beyond standard health insurance. People sometimes use the term “secondary insurance” for supplemental insurance, too, or they may call it gap health insurance.

Here’s a look at supplemental insurance options:

• Critical illness insurance: Critical illness insurance covers expenses not covered by health insurance. Critical illness insurance generally pays a lump sum, such as $25,000, if you’re diagnosed with a critical illness. You can use that money for any reason, including paying for care or your mortgage.
• Dental insurance: Dental insurance helps offset the costs of dental care and is often separate from a health insurance plan. Policies vary by costs, deductibles, coverage maximums and waiting periods. For instance, some dental plans only cover preventive services, while others cover preventive, basic and major care, and may even pay a portion for braces, dental implants and dentures.
• Disability insurance: Disability insurance pays a portion of your lost wages if you become ill or injured and can’t work. These policies may offer short-term or long-term coverage and you may be able to buy individual plans directly from companies or get coverage through an employer.
• Long-term care insurance: Long-term care insurance covers care that a health insurance plan may not cover, including adult day care, assisted living facilities, home health aides and nursing aides.
• Vision insurance: Vision insurance, which can be part of a health insurance plan or a separate policy, offers help paying for vision care, such as exams, glasses and contact lenses.

What Does Secondary Insurance Cover?

A secondary health insurance may cover healthcare services that aren’t covered by your primary health insurer.

For instance, if you receive $100 of healthcare services and your plan picks up 70% of the costs, you would owe your doctor $30. If you have a secondary insurance company, that insurer may pick up a portion of the $30 that’s left over.

What a secondary insurance plan may not cover varies by the specific health plan. That’s why it’s critical to understand what each health plan covers and what it excludes.

You also want to ensure you get care from in-network providers. Some health plans like health maintenance organization (HMO) and exclusive provider organization (EPO) plans don’t typically cover any out-of-network services unless it’s an emergency.

Having a provider considered in-network in one plan and out-of-network in the other complicates things. You will likely have to pay more for health insurance services since one insurer will pay at the lower out-of-network rate or will not pay at all.

Multiple insurance plans also mean you likely have two premiums, deductibles, coinsurance and out-of-pocket costs. A second health plan won’t help pay those primary health plan costs.

How Much Does Secondary Insurance Cost?

It costs an average of $420 on average monthly for a 40-year-old with a bronze health insurance plan on the Affordable Care Act (ACA) marketplace, sometimes called Obamacare. The marketplace is where you can buy a health insurance plan for yourself or your family if you don’t have health insurance through work.

The average health insurance costs for a silver plan is $549 monthly for a 40-year-old and $713 for a gold plan. The exact cost of an ACA plan differs by multiple factors, including age, location, company, metal tier and type of benefit design.

Is Secondary Insurance Worth It?

Secondary health insurance can help reduce out-of-pocket costs, but having multiple health plans isn’t always a great situation. Paying two premiums and deductibles and juggling two provider networks and health plan benefits may be costly and a health insurance headache.

On the flip side, a secondary health insurance plan with little to no health insurance premiums, a low health insurance deductible, generous coinsurance rates and a wide provider network may be worth it.

For instance, if you see an out-of-network provider on your primary plan, you would not be covered for the associated costs unless your plan covers out-of-network treatment. But if that provider is in-network on your secondary plan, you would be covered according to the plan’s benefits for in-network care. This is one scenario in which secondary insurance is worthwhile, says Cyndee Weston, executive director of the American Medical Billing Association.

Secondary Health Insurance Frequently Asked Questions (FAQs)