Insurance

Administration

Rule R590-131: Accident and Health Coordination of Benefits Rule

Effective Date: 08/22/2022

Admin. Code Reference: R590-131

Rule Type: Current Rule

R590. Insurance, Administration.

R590-131. Accident and Health Coordination of Benefits Rule.

R590-131-1. Authority.

This rule is promulgated by the commissioner pursuant to Sections 31A-2-201 and 31A-22-619.

R590-131-2. Purpose and Scope.

(1) The purpose of this rule is to:

(a) establish an order for an insurer to pay a coordination of benefits claim;

(b) establish when benefits may be reduced under a secondary plan; and

(2) This rule applies to an insurer offering accident and health insurance.

R590-131-3. Definitions.

Terms used in this rule are defined in Section 31A-1-301. Additional terms are defined as follows:

(1) "Allowable expense" means a health care expense, including coinsurance or a copayment without reduction for any applicable deductible, that is covered in full or in part by any plan covering an enrollee.

(a) If an enrollee advises an insurer that each plan covering the enrollee is a high-deductible health plan and the enrollee intends to contribute to a health savings account established in accordance with Section 223 of the Internal Revenue Code of 1986, then the primary high-deductible health plan's deductible is not an allowable expense, except for a health care expense incurred that is not subject to the deductible as described in Section 223(c)(2)(C) of the Internal Revenue Code of 1986.

(b) An expense or a portion of an expense that is not covered by any plan is not an allowable expense.

(c) Any expense that a provider, by law or in accordance with a contractual agreement, is prohibited from charging an enrollee is not an allowable expense.

(d) The examples in this subsection (1)(d) are not an allowable expense.

(i) If an enrollee is confined in a private hospital room, the difference between the cost of a semi-private room and the private room is not an allowable expense, unless one of the plans provides coverage for a private hospital room expense.

(ii) If an enrollee is covered by two or more plans that compute their benefit on the basis of a usual and customary fee, a relative value schedule, or other similar reimbursement methodology, any amount charged by the provider in excess of the highest reimbursement amount for a specified benefit is not an allowable expense.

(iii) If an enrollee is covered by two or more plans that provide a benefit or service on the basis of a negotiated fee, any amount in excess of the highest negotiated fee is not an allowable expense.

(iv) If an enrollee is covered by one plan that calculates its benefit or service on the basis of a usual and customary fee, a relative value schedule, or other similar reimbursement methodology and another plan that provides its benefit or service on the basis of a negotiated fee, then the primary plan's payment arrangement shall be the allowable expense for each plan.

(v) If a provider has a contract with the secondary plan to provide the benefit or service for a specific negotiated fee or payment amount that is different than the primary plan's payment arrangement, and if the provider's contract permits, that negotiated fee or payment shall be the allowable expense used by the secondary plan to determine its benefits.

(e) The definition of "allowable expense" may exclude certain types of coverage or benefits such as dental care, vision care, prescription drugs, or hearing aids.

(i) A plan that limits the application of COB to certain coverages or benefits may limit the definition of "allowable expense" in its contract to expenses that are similar to the expenses that it provides.

(ii) When COB is restricted to specific coverages or benefits in a contract, the definition of "allowable expense" shall include similar expenses to which COB applies.

(f) When a plan provides benefits in the form of a service, the reasonable cash value of each service will be considered an allowable expense and a benefit paid.

(g) The amount of a reduction may be excluded from allowable expense when an enrollee's benefits are reduced under a primary plan because the enrollee does not comply with the plan provisions concerning a second surgical opinion or pre-certification of an admission or a service.

(2)(a) "Birthday" means the month and day the enrollee was born.

(b) "Birthday" does not include the year the enrollee was born.

(3) "Child" means a:

(a) child as defined in Section 78B-12-102; or

(b) dependent child who is provided coverage pursuant to Sections 31A-22-610, 31A-22-610.5, and 31A-22-611.

(4)(a) "Claim" means a request that a plan's benefits be provided or paid.

(b) A benefit claimed may be in the form of:

(i) a service, including a supply;

(ii) payment for all or a portion of the expenses incurred;

(iii) a combination of Subsections (4)(b)(i) and (4)(b)(ii); or

(iv) an indemnification.

(5) "Closed panel plan" means a plan that:

(a) provides benefits to an enrollee primarily in the form of services through a panel of providers that have contracted with or are employed by an insurer; and

(b) excludes a benefit for a service provided by a non-panel provider, except in the case of:

(i) an emergency; or

(ii) a referral by a panel provider.

(6)(a) "Conforming plan" or "Plan" means a plan that allows COB.

(b) "Conforming plan" or "Plan" includes:

(i) an individual, group, or group-type accident and health insurance contract, including a closed panel plan;

(ii) a group or group-type uninsured arrangement;

(iii) a medical care benefit in a long-term care contract that provides reimbursement for an incurred expense, rather than an indemnity benefit; and

(iv) a Medicare or other governmental benefit, as permitted by law.

(7) "Continuation coverage" or "COBRA" means coverage provided under the Consolidated Omnibus Budget Reconciliation Act of 195, Section 31A-22-722, or another state extension required by law.

(8) "Coordinated package" means multiple plans or separate parts of a plan that are intended to be part of a coordinated plan of benefits.

(9) "Coordination of benefits" or "COB" means a plan provision that establishes an order in which a plan pays a coordination of benefit claim, and a plan, other than a primary plan, to reduce the plan benefits so that the combined benefit of all plans do not exceed the total allowable expense.

(10) "Custodial parent" means:

(a) the parent awarded custody of a child by a court order; or

(b) in the absence of a court order, the parent with whom the child resides more than one-half of the calendar year without regard to any temporary visitation.

(11)(a) "Group-type contract" means a contract that:

(i) is not available to the general public; and

(ii) is obtained and maintained only because of membership in, or a connection with, a particular organization or group, including blanket coverage.

(b) "Group-type contract" does not mean an individually underwritten guaranteed renewable policy even if the policy is purchased through payroll deduction at a premium savings and the enrollee has the right to maintain or renew the policy independently of continued employment with the employer.

(12) "High-deductible health plan" means a high-deductible plan as defined in Section 223, Internal Revenue Code.

(13)(a) "Hospital indemnity benefit" or "fixed indemnity benefit" means a benefit that is not related to actual incurred expenses.

(b) "Hospital indemnity benefit" or "fixed indemnity benefit" does not include a reimbursement-type benefit designed or administered to give the enrollee the right to elect an indemnity-type benefit at the time of a claim.

(14)(a) "Non-conforming plan" means a plan that may not coordinate benefits.

(b) "Non-conforming plan" includes:

(i) hospital indemnity benefits or fixed indemnity benefits;

(ii) accident-only coverage;

(iii) specified disease or specified accident coverage;

(iv) limited benefit health coverage described in Section R590-126-7;

(v) school accident coverage that covers a student for accidents only, including athletic injuries, either on a 24-hour basis or on a to-and-from-school basis;

(vi) benefits provided in a long-term care contract for a non-medical service, including:

(A) personal care, adult day care, homemaker services, assistance with activities of daily living, respite care, and custodial care; and

(B) a contract that pays a fixed daily benefit without regard to an expense incurred or the receipt of a service;

(vii) a Medicare supplement contract;

(viii) a state plan under Medicaid; and

(ix) a governmental plan that, by law, provides benefits that are in excess to any private insurance plan or other non-governmental plan.

(15)(a) "Primary plan" means a plan whose benefits for an enrollee's health care coverage must be determined without considering any other plan.

(b) A plan is a primary plan if:

(i) a plan either:

(A) has no order of benefit determination; or

(B) has a benefit determination provision that differs from the provisions in this rule; or

(ii) a plan uses this rule's order of benefit determination and under Section R590-131-6 the plan determines its benefits first.

(16) "Retiree employee benefit plan" means an employee benefit plan as defined in the Employee Retirement Income Security Act of 1974, 29 U.S.C. 1002(3).

(17) "Secondary plan" means a plan that is not a primary plan.

R590-131-4. Coordination of Benefits Contract Provisions.

(1) A COB provision may not be used that permits a plan to reduce the plan benefits on the basis that an enrollee is eligible to enroll in another plan and the enrollee did not enroll in that plan.

(2)(a) Under the terms of a closed panel plan, benefits are not payable if the enrollee does not use the services of a closed panel plan's providers.

(b) In most instances, COB does not occur if an enrollee is enrolled in two or more closed panel plans and obtains services from a provider in only one of the closed panel plans because the other closed panel plan, the one whose providers were not used, has no liability.

(c)(i) COB may occur when an enrollee receives emergency services that are covered by both plans.

(ii) The secondary plan shall use Section R590-131-7 to determine the amount it shall pay for the benefit.

(3) A plan may not use a COB or other provision that reduces the plan's benefits for non-conforming benefits.

(4) A coordinated package is one plan and there is no COB among the multiple plans or separate parts of a plan.

(5) If a plan coordinates benefits, the plan shall state the type of coverage that will be considered in applying the COB provision.

(6) Whether a plan uses the term "plan" or some other term such as "program," the definition may not be broader than the definition of "plan."

R590-131-5. Rules for Coordination of Benefits.

When an enrollee is covered by more than one plan, the rules for determining the order of benefit payments are as follows:

(1) The primary plan shall pay or provide benefits as if a secondary plan does not exist.

(2) If the primary plan is a closed panel plan and the secondary plan is not a closed panel plan, the secondary plan shall pay or provide benefits as the primary plan, except for an emergency service or an authorized referral that is paid by the primary plan.

(3) If an enrollee is covered by more than one secondary plan, the order of benefits is determined using Section R590-131-6.

(4)(a) Except as provided in Subsection (4)(b), a plan that does not contain a COB provision consistent with this rule is the primary plan unless both plans state that the conforming plan is primary.

(b) Supplemental coverage that is obtained through membership in a group may be excess to a plan with a basic package of benefits.

(i) Supplemental coverage includes:

(A) major medical coverage that is superimposed over a base plan providing hospital and surgical expense benefits; and

(B) insurance type coverage that is written in connection with a closed panel plan to provide out-of-network benefits.

(ii) Supplemental coverage does not include a non-conforming plan.

(5) Consideration of benefits paid or provided by another plan may only occur when the plan is secondary to the other plan.

R590-131-6. Determining Order of Benefits.

The order of benefits for each plan is determined using the first rule that applies in this section.

(1) Non-dependent or Dependent Rule.

The plan covering an enrollee as a non-dependent, such as an employee, member, policyholder, or retiree, is the primary plan and the plan covering the enrollee as a dependent is the secondary plan.

(2) Child Covered Under More Than One Plan Rule.

A plan covering a child shall determine the order of benefits as follows, unless there is a court order stating otherwise.

(a) For a child whose parents are married or whose parents are living together if they have never been married:

(i) the plan of the parent whose birthday falls earlier in the calendar year is the primary plan; or

(ii) if both parents have the same birthday, the plan that has covered the parent the longest is the primary plan.

(b) For a child whose parents are divorced, legally separated, or are not living together if they have never been married:

(i)(A) if a court order states that one of the parents is responsible for the child's health care expenses or health care coverage, the responsible parent's plan is the primary plan; or

(B) if the parent responsible for the child's health care expenses or health care coverage does not have health care coverage for the child, but the responsible parent's spouse has health care coverage for the child, the responsible parent's spouse's plan is the primary plan;

(ii) if a court order states that both parents are responsible for the child's health care expenses or health care coverage, Subsection (2)(a) applies;

(iii) if a court order states that the parents have joint custody without stating that one parent has responsibility for the health care expenses or health care coverage of the child, Subsection (2)(a) applies; and

(iv) if no court order allocates responsibility for the child's health care expenses or health care coverage, the order of benefits for the child is:

(A) the plan covering the custodial parent;

(B) the plan covering the custodial parent's spouse;

(D) the plan covering the non-custodial parent's spouse.

(c) If a plan provides coverage for a child through an individual who is not a parent of the child, the order of benefits is determined under Subsections (2)(a) and (2)(b) as if the individual is the child's parent.

(3) Active, Retired, or Laid-Off Employee Rule.

(a)(i) A plan covering an active employee who is not laid-off, retired, or a dependent of an active employee, is the primary plan.

(ii) A plan covering a retired employee or a laid-off employee, or a dependent of a retired employee or laid-off employee, is the secondary plan.

(b) Subsection (3) does not apply if:

(i) the other plan does not have an active, retired, or laid-off rule and the plans do not agree on the order of benefits; or

(ii) Subsection (1) determines the order of benefits.

(4) Continuation of Coverage Rule.

(a) If an enrollee is covered under a continuation of coverage law and another plan, the plan under a continuation of coverage law is the secondary plan.

(b) Subsection (4)(a) does not apply if:

(i) the other plan does not have a continuation of coverage rule and the plans do not agree on the order of benefits; or

(ii) Subsection (1) determines the order of benefits.

(5) Longer or Shorter Length of Coverage Rule.

(a) If Subsections (1) through (4) do not determine the order of benefits;

(i) the plan covering an enrollee for the longest time period is the primary plan; and

(ii) the plan covering an enrollee for the shortest time period is the secondary plan.

(b)(i) To determine the length of time an enrollee is covered under a plan, two successive plans are treated as one if the enrollee was eligible under the second plan within 24 hours after coverage under the first plan ended.

(ii) The start of a new plan does not include:

(A) a change in the amount or scope of a plan's benefits;

(B) a change in the entity that pays, provides, or administers the plan's benefits; or

(iii)(A) The time an enrollee is covered under a plan is measured from the enrollee's first date of coverage under that plan.

(B) If the date in Subsection (5)(b)(iii)(A) is not readily available, the date the enrollee first became a member of the group will determine the length of time the enrollee is covered under a plan.

(6) If Subsections (1) through (5) cannot determine the primary plan, the plans shall equally share the allowable expense.

(7)(a) If the plans cannot agree on the order of benefits within 30 calendar days after the plans have received the information needed to pay the claim, the plans shall immediately pay the claim in equal shares and determine their relative liabilities following payment.

(b) A plan is not required to pay more than it would have paid as a primary plan.

R590-131-7. Procedure to be Followed by Secondary Plan to Calculate Benefits and Pay a Claim.

(1) If a secondary plan coordinates benefits, the secondary plan shall:

(a) calculate the plan benefits it would have paid absent any other health care coverage; and

(b) apply the amount calculated in Subsection (1)(a) to any allowable expense unpaid by the primary plan.

(2) The secondary plan may reduce its payment amount so that when combined with the primary plan's payment, the total benefits paid or provided by all plans for the claim do not exceed 100% of the total allowable expense for that claim.

(3) The secondary plan shall credit to the plan deductible any amounts it would have credited to the plan deductible in the absence of other health care coverage.

R590-131-8. Miscellaneous Provisions.

(1) Reasonable Cash Value of Services.

(a) A secondary plan that provides a benefit in the form of a service may recover the reasonable cash value of providing the service from the primary plan, if the service is covered by the primary plan and has not been paid or provided by the primary plan.

(b) Nothing in this Subsection may be interpreted to require a plan to reimburse an enrollee the cash value of a service provided by a plan that provides a benefit in the form of a service.

(2) Excess and Other Provisions.

(a) Except as provided in Subsection (2)(b), a conforming plan may not contain a provision that the plan benefits are excess or always secondary to any other plan or policy.

(b) A blanket accident-only plan may contain a provision that its benefits are excess or always secondary to any other plan.

(3) Non-conforming Plan.

(a) A conforming plan may coordinate benefits with a non-conforming plan.

(i) If the conforming plan is the primary plan, it shall pay or provide its benefits as the primary plan;

(ii) If the conforming plan is the secondary plan, it shall pay or provide its benefits as the secondary plan, and the payment shall be the limit of the conforming plan's liability.

(iii) If the non-conforming plan does not provide the information needed by the conforming plan to determine its benefits within a reasonable time after it is requested to do so, the conforming plan shall assume that the benefits of the non-conforming plan are identical to its own and shall pay its benefits accordingly.

(iv) If the conforming plan receives information as to the actual benefits of the non-conforming plan, it may adjust any payments in compliance with Subsection 31A-26-301.6(14)(a)(ii).

(b)(i) If a non-conforming plan reduces its benefits so that the enrollee receives less in benefits than the enrollee would have received had the conforming plan paid or provided its benefits as the secondary plan, and the non-conforming plan paid or provided its benefits as the primary plan, then the conforming plan shall advance to the enrollee, or on behalf of the enrollee, an amount equal to the difference.

(ii) In no event shall the conforming plan advance more than the conforming plan would have paid had it been the primary plan, less any amount it had previously paid.

(iii) In consideration of an advance, the conforming plan shall be subrogated to all rights of the covered person against the non-conforming plan in the absence of subrogation.

(iv) An advance by the conforming plan shall be without prejudice to any claim it may have against a non-conforming plan in the absence of subrogation.

(4) Subrogation.

COB differs from subrogation. Provisions for either COB or subrogation may be included in a contract without compelling the inclusion or exclusion of the other.

(5) Right To Receive and Release Needed Information.

(a) An insurer may obtain or give needed information to another person without obtaining consent from an enrollee.

(b) To facilitate cooperation with insurers, guidelines for medical privacy issues are provided under Rule R590-206, Privacy of Consumer Financial and Health Information Rule, and Gramm-Leach-Bliley Act of 1999, 15 U.S.C. 6801 et. seq.

(6) Right of Recovery.

(a) If an insurer is paid more than required under this rule, subject to Section 31A-26-301.6, the insurer may recover the overpayment from one or more of the following:

(i) the enrollee;

(ii) the provider;

(iii) an insurer; or

(iv) another organization.

(b) The insurer is responsible for adjustments between insurers and providers.

(7) Notice to Enrollee. The explanation of benefits provided to an enrollee shall include, "If you are covered by more than one health benefit plan, you should file all your claims with each plan."

(8) If covered benefits are due to a loss under Section 31A-22-306, an accident and health insurer may exclude benefits covered by personal injury protection described in Subsection 31A-22-307(1)(a), up to:

(a) the personal injury protection benefit provided by motor vehicle insurance; or

(b) if motor vehicle insurance is not in effect, the minimum amount provided in Subsection 31A-22-307(1)(a).

(9) Facility of Payment.

(a) If a plan pays an amount that should have been paid under an insurer's plan, the insurer may pay that amount to the other plan.

(b) The amount the insurer pays to the other plan is treated as a benefit paid under the plan and the insurer will not have to pay that amount again.

R590-131-9. COB Scenarios.

The scenarios identified in this section are provided to demonstrate the possible use of the COB rules.

(1) Parents Not Married, Living Together, No Court Order. The order of benefits under Subsection R590-131-6(2)(a) is:

(a)(i) the parent whose birthday falls earlier in the calendar year; then

(ii) the parent whose birthday falls later in the calendar year; or

(b)(i) if the parents have the same birthday, the plan that has covered the parent the longest; then

(ii) the plan that has covered the parent the shortest.

(2) Parents Divorced, Separated, or Not Living Together.

(a) A court order awards joint custody to the parents, the father is responsible for the child's health care expenses or health care coverage, and the father has health care coverage. The order of benefits under Subsection R590-131-6(2)(b)(i) is:

(i) natural father;

(ii) stepmother;

(iii) natural mother;

(iv) stepfather.

(b) A court order awards joint custody to the parents, the order specifies the father is responsible for the child's health care expenses or health care coverage, the father does not have health care coverage, and the father's wife has health care coverage. The order of benefits under Subsection R590-131-6(2)(b)(i) is:

(i) stepmother;

(ii) natural mother;

(iii) stepfather.

(c) A court order awards custody to the father and requires both parents to share responsibility for the child's health care expenses or health care coverage. The father's birthday is December 1, the stepmother's birthday is February 17, the mother's birthday is August 23, and the stepfather's birthday is January 1. The order of benefits under Subsection R590-131-6(2)(b)(ii) is:

(i) stepfather;

(ii) stepmother;

(iii) natural mother;

(iv) natural father.

(d) A court order awards joint custody, the father physical custody, and does not specify responsibility for the child's health care expenses or health care coverage. The father's birthday is December 1, the stepmother's birthday is February 17, the mother's birthday is August 23, and the stepfather's birthday is January 10. The order of benefits under Subsection R590-131-6(2)(b)(iii) is:

(i) stepfather;

(ii) stepmother;

(iii) natural mother;

(iv) natural father.

(e) A court order awards joint custody and requires both parents to share responsibility for health care expenses or health care coverage. The child lives with the mother 51% of the year. The father's birthday is December 1, the stepmother's birthday is February 17, the mother's birthday is August 23, and the stepfather's birthday is January 10. The order of benefits under Subsection R590-131-6(2)(b)(ii) is:

(i) stepfather;

(ii) stepmother;

(iii) natural mother;

(iv) natural father.

(3) Parents Never Married, Not Living Together.

(a) No court order exists. The order of benefits under Subsection R590-131-6(2)(b)(iv) is;

(i) custodial parent;

(ii) custodial parent's spouse;

(iii) non-custodial parent;

(iv) non-custodial parent's spouse.

(b) A court order awards custody to the mother, and does not address the child's health care expenses or health care coverage. The order of benefits under Subsection R590-131-6(2)(b)(iv) is:

(i) natural mother;

(ii) stepfather;

(iii) natural father;

(iv) stepmother.

(4) Child No Longer a Minor.

(a) A court orders the natural father to provide health care coverage for a child up to age 18 or while attending high school, whichever is later, and custody is awarded to the natural mother. The child is now age 18, or older, no longer attends high school, and resides with the natural mother. The order of benefits under Subsection R590-131-6(2)(b)(iv) is:

(i) natural mother;

(ii) stepfather;

(iii) natural father;

(iv) stepmother.

(b) A court orders the natural father to provide health care coverage for a child up to age 18 or while attending high school, whichever is later, and custody is awarded to the natural mother. The child is now age 18, or older, no longer attends high school, and does not reside with either parent. The order of benefits under Subsection R590-131-6(5) is:

(i) the plan covering an enrollee for the longest period;

(ii) the plan covering an enrollee for the shortest period.

R590-131-10. Severability.

If any provision of this rule, R590-131, or its application to any person or situation is held invalid, such invalidity does not affect any other provision or application of this rule that can be given effect without the invalid provision or application. The remainder of this rule shall be given effect without the invalid provision or application.

KEY: insurance law

Date of Last Change: August 22, 2022

Notice of Continuation: September 28, 2022

Authorizing, and Implemented or Interpreted Law: 31A-2-201; 31A-22-619