Coordination of Benefits
Rules that determine how two or more health insurance plans share payment for the same claim.
What is COB?
Coordination of benefits (COB) is the process used when a person is covered by more than one health insurance plan to determine which plan pays first (primary) and which pays second (secondary). The primary plan pays up to its normal benefit; the secondary plan may cover some or all of the remaining balance, but total payments across both plans cannot exceed the actual cost of care. Common COB rules include the birthday rule (for dependents covered by two parents' employer plans, the plan of the parent with the earlier birthday in the calendar year is primary) and non-duplication clauses that limit secondary payment to the primary plan's unpaid balance.
Example
A child is covered by both parents' employer-sponsored health plans. The primary plan (determined by the birthday rule) pays $3,200 toward a $4,000 hospital bill. The secondary plan then pays up to the remaining $800, potentially leaving the family with little or no out-of-pocket cost, compared to the full deductible and coinsurance they would owe under a single plan.
Source: Centers for Medicare & Medicaid Services — Coordination of Benefits