Weighing the pros and cons of two policies


*Q * I am covered by two insurance policies, each covering 80 percent of expenses. If I have a $100 charge, for example, and my primary insurance policy pays $80, my second company only pays 80 percent of the remaining $20. They do not pay the full $20. Is that correct?

*A * Simply put, no.

Under an extremely unlikely scenario, it is possible that the correct payment from the second insurance company would equal 80 percent of the remaining $20. But if this has occurred more than once, your insurance company is wrong.

The question here involves a "coordination of benefits." That is, how do the benefits of one insurance policy coordinate -- or fit in -- with the benefits of another policy?

The easiest way to explain this is to use your $100 example.

Let's first assume you have a $20 deductible under your first policy and a $40 deductible on your second policy.

When that $100 charge comes in, your first policy will make you responsible for the first $20. Then it will pay 80 percent of the remaining $80. That is $64.

Before you send off a check for the $20 deductible you owe your doctor, though, submit the $100 charge to your second insurance company.

You have a $40 deductible there. So the second insurer is responsible for 80 percent of the remaining $60, or a total of $48. But because you only have an unpaid balance of $36, the second insurance company would pay only that amount.

This $36 is then sent either to you or your doctor and you are off the hook for the $20 deductible from your first policy.

Forget that your out-of-pocket expenses were all paid for. Both of your deductibles have been met as far as your insurance companies are concerned.

Try this with a more complicated example, and you begin to see why people, including those at insurance companies, have a hard time keeping this straight. And if your insurance company gives you a hard time on this, get a copy of your policy and call the Inquiry and Investigation Section of the Maryland Insurance Division at 333-6300.

One more thing: While two policies seem attractive, take a close look at your medical costs each year and figure out if the premiums on your second policy is worth the amount it saves you.

You should consider spending the extra money on a more complete single policy. Or take a look at add-on policies that pay for medical costs that your primary insurance policy does not cover at all.

* Peter Frank is a business reporter for The Sun.

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