Coordination of Benefits

Coordination of benefits refers to the order in which multiple plans will pay for a covered event.  Usually whoever pays first, pays the lion’s share.  That’s why there is such a to-do about it, nobody wants to be first.

With both parents/spouses working, you can wind up with dual coverage – nice problem to have.  Some plans will flat out stipulate that if there is another plan, they will pay last.  Or for dependant children the order of payment can be determined by going with the eldest parent’s plan, or by whose birthday occurred first in the calendar year.  There are others methods too, the point being there is a sequential order to who pays first, second and third.

Third?  Some ancillary accident and excess medical expense plans stipulate they pay last and only the left over ‘up to’ amounts.  It may seem like somehow you got gypped when your $5,000 accident plan only pays $300 – but the bill gets paid and that’s what it’s there for.

So why is it important to know, “who’s on first”?  If you go to the hospital, and list the last to pay insurance as the first to pay … you can be in for some fun times straightening it all out.  It is one headache you can (and which you want) to avoid.  And also so you don’t try to get a last to pay to pick up expenses it won’t. You'll want to make sure you see a physician in the right network, etc.

If you have the problem of multiple insurance coverage, but don’t know who pays first, just call your plan(s) and they will tell you.

Indemnity Plans - Fixed Benefits or 'Up To' Limits

An indemnity plan pays you a benefit to cover costs associated to healthcare.  But there are two different ways the benefits are calculated.  One is a fixed benefit – the amount is fixed.  The other is an ‘up to’ amount – it pays based on the actual cost incurred for care, "up to" some certain amount.

Now, getting money in any form is generally a good thing.  And I’m not saying one of these methods is necessarily better than the other. But you should know what you are getting.

For example, you break your forearm.  A fixed benefit plan may say it will pay $700.  That means it will pay $700.  If it actually cost $500, you still get $700.  If it cost $900, you get $700.

If your plan pays up to the ‘reasonable and customary amount in your area’, the amount can vary.  You will never get more than what the cost was – ever.  And if the going rate in your area to fix a broken arm is $500, that is what your insurer will pay up to.  If you only paid $450, you will get $450.  If you actually paid $550, you will get $500.  If you move to another state and the reasonable and customary rate there is $700, then that would be the ‘up to’ number.

If you have an indemnity plan, I encourage you to know in advance how the benefits are calculated.  If you need help figuring it out, feel free to contact me.

Is Your Co-Pay a Good Deal

The idea of a copay – knowing how much that Drs visit is going to cost – is great.  [If only that could happen when I take my car to the shop!]  It feels good because it gives you a peace in knowing it’s only going to cost $__.  But is it really a good deal – for you?

The first question is, how often do you go to the Drs?  If you are really healthy and only go to the Drs once a year (if that), you are paying a lot for a feature you really aren’t using.  Do a price comparison to see how much a year you are paying extra for that feature and then ask, what is the likelihood that you will spend that much at the Drs.? Remember, you will still get the negotiated rate even when you pay out of pocket.

The flip side is that if you do go to the Drs a lot, the copay feature is probably going to be worth it to you.  If you have young children, I would definitely recommend it.

Sometimes you can get the best of both worlds with a reduced rate for a limited number of Drs visits.  This can give you a good level of comfort for that ‘what if’ scenario.

Another option you may find is a ‘reduced’ copay.  See how much extra that feature adds to your premium, divide it by the cost savings and see if you think if it is likely you will go to the Drs that many times in a year.  Probably you won’t.

So is that CoPay a good deal?  The money is pretty easy to figure out.  The emotional ‘cost’ is more difficult to quantify.  Insurance is about being able to sleep at night and not having to worry.  For some, it is worth paying more so they can not have to worry about ‘what if’.  The value of the copay will be a totally subjective call on your part.  We all want to save money, but peace of mind is not something you want to sacrifice.

I'm Young and Single, Why Do I Need Life Insurance

There are several valid reasons why you should have life insurance even though you seemingly have no need.  Even without the above obligations, there are ‘needs’ to consider.

It’s kind of an oxymoron, but life insurance is about dying.  And so, yes, it is all about those who are left behind.  It is about leaving a reservoir of cash behind to help those whom you designate as a beneficiary.

The most immediate expense will be your funeral.  Whether you want an ornate casket, an urn or a wicker basket, it’s going to cost somebody.  And because your grieving family may want to make a last tribute, there may be even another layer of expense of a flowers, family plot, an after service reception, etc.  A life insurance policy can take care of all those expenses.

Beyond your parents missing you terribly in the short term, they may also miss your ability to help them in their old age.  The world over, children help their parents as they get older.  You may want to leave a nest egg to help your parents live more comfortably in their senior years.

And, there is also a really good reason for yourself too.  Right now, it’s the cheapest it’s ever going to be.  When you buy a policy now, you lock in the wonderful low rate.  So if you even think you may want to have a family (or be benevolent to other family members or causes) down the road, this could be a really smart purchase.

Oh yeah, and it can pay off your bills.  Granted, no one can force another to pay your obligations, but everything you own can be auctioned off to pay those bills.  If you have property, keepsakes, heirlooms – stuff – you would like to leave to others, a life insurance policy can make that happen.

Whether you buy a life insurance policy for your own or to help others, now is the time to buy it.  Look for my blog about How Much Life Insurance Do I Need? or Check out our Life Insurance Calculator.

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