California Life and Health Insurance Practice Exam

When a claimant has coverage under more than one health plan, which provision applies?

1. Exclusion of benefits

2. Coordination of benefits

3. Benefit assignment

4. Health insurance portability

The correct answer is: Coordination of benefits

When a claimant is covered under more than one health plan, the provision known as Coordination of Benefits (COB) applies. This provision is designed to determine the order in which multiple insurance policies will pay benefits, ensuring that the total coverage does not exceed the actual costs incurred by the claimant. COB is important because it helps to prevent overinsurance and ensures that each insurer knows its responsibility in paying claims. It typically involves rules that indicate which plan pays first based on factors such as the type of coverage, the relationship of the insured to the policyholder, or the policy effective date. Understanding how COB works is essential for both policyholders and insurers, as it impacts claims processing and the management of healthcare costs. Other options like exclusion of benefits, benefit assignment, and health insurance portability do not specifically address situations involving multiple health plans and the interplay between them in terms of benefits provided.