What does 'Coordination of Benefits' refer to in health insurance?

'Coordination of Benefits' specifically refers to the process that determines how multiple health insurance policies will work together when covering the same individual for the same medical expenses. When an individual is covered under more than one health insurance plan, coordination of benefits helps to ensure that the total amount of insurance benefits paid does not exceed 100% of the medical expenses incurred.

By defining how benefits from different insurers interact, this provision avoids situations where a policyholder could receive double payment for the same claim. It sets the rules for which insurer pays first and which pays second, based on factors such as the type of coverage and the order of policy activation. Consequently, the goal is to manage the payment process smoothly and ensure fairness and efficiency in claims handling.

This concept is crucial for preventing inefficiencies and potential fraud in the insurance system, providing a clear framework for all involved parties.