TIERS OF COVERAGE

Tiers of health insurance coverage refer to the situations that arise when individuals are covered by more than one health insurance plan; thus, one plan is the primary insurance, the next becomes the secondary insurance, a third would be tertiary coverage, and so on. Tiers of coverage are most common with Medicare beneficiaries but can also result from individuals who receive coverage from their employer as well as their spouse's employer, among other scenarios.

Common multiple coverage situations

Being covered by more than one health insurance plan can happen in a number of ways, but here are some more prevalent examples of how it comes about.

• Medicare beneficiaries who also have coverage through an employer. The employer coverage is usually primary with some exceptions.
• Medicare beneficiaries who have purchased a Medicare Supplement plan. The supplement plan is always secondary to the Medicare plan.
• Medicare beneficiaries who are also eligible for Medicaid (known as Dual-Eligible Beneficiaries). Medicaid is always secondary to Medicare.
• Medicare beneficiaries who also have Tricare coverage. Tricare is always secondary to Medicare.
• Spouses (and their children) who have coverage through their own employer as well as well as their spouse's employer. Primary and secondary coverages can vary in these situations.

How coverage tiers work in terms of billing

This can get somewhat complicated, but in general, when a patient has multiple insurance plans, the first thing a provider's office will do is determine which plan is primary. Once that is established and the patient visit is completed, a claim will be prepared and submitted to the primary insurer. The primary insurer will adjudicate the claim according to the patient's schedule of benefits and reimburse the provider as appropriate. If there is a patient cost-share balance remaining after the primary insurance has paid its portion, that remaining balance is then submitted to the secondary insurer for payment. The secondary insurer will then adjudicate the claim and pay on the remaining balance as appropriate. If the patient has a tertiary insurance, the remaining balance, if any, would be submitted to that insurer, and so on. If a balance remains after all of the patient's insurance plans have paid their portion, the patient is then billed the remaining balance.

One important thing to note in terms of coverage tiers is that, in general, providers are not allowed to charge the secondary insurance provider the difference between what they charge for services (the UCR rate) and the primary insurance's contracted rate. In other words, secondary and any other coverage on down the line is intended to cover only the remaining patient cost-share balance after the primary insurer has adjudicated the claim and not to allow healthcare providers to recover the contractual write-off imposed by the primary insurer. If this all sounds completely foreign, please check out the Healthcare Whiz medical billing section for further information on the billing terms used here.

Essential QSA Knowledge

Being covered by multiple insurance plans can be advantageous for consumers in terms of minimizing out-of-pocket exposure. Many times, quality primary and secondary insurance combinations will cover a majority of the costs. Secondary coverages also do not increase the total amount paid to healthcare providers; they serve only to limit the patient's out-of-pocket costs. So if you're considering purchasing secondary coverage, the reasoning should be similar to our thought process in the right insurance plan section: will the premium costs of the secondary coverage be less than what I will save in out-of-pocket costs? Purchase the coverage if you think the answer is yes; do not purchase if you think the answer is no.

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