While most Americans only have one health insurance plan, known as primary insurance, some individuals will have an additional secondary insurance plan. Having dual coverage is perfectly legal—you just need to coordinate your two benefits correctly to ensure your medical expenses are covered compliantly.
If you’re new to dual insurance, you’ve come to the right place! This article will cover why someone might have two health insurance plans, how to coordinate the two health policies, and how to determine which plan is primary and which is secondary.
Why would an individual have two health insurance plans?
First, let’s talk about when someone might have two health insurance plans in the first place. There are several scenarios where this might happen. For example, if you’re married and you and your spouse both have a group health insurance plan from your employer, you might be covered by your plan and listed as a dependent on your spouse’s plan.
Dual insurance is also common for students who may have a student or university medical plan but are younger than 26 and still participate in their parents’ insurance plan. Children of divorced parents might also have separate health insurance policies—one from each parent.
Another example is for those who qualify for Medicaid but have their own insurance plan to supplement their Medicaid coverage. This can be an individual health insurance policy purchased on the Marketplace or an employer plan.
How do two health insurance plans work together?
When you have two health insurance plans, this doesn’t mean that you’ll be fully covered twice by each medical plan. Instead, one is assigned as your primary health insurance plan, while the other is your secondary health plan. That ensures that the total amount your two plans will pay for your health expenses will never exceed 100% of the cost of those expenses.
Coordination of benefits is the process that decides which insurance pays first for a claim, which is why it’s essential to understand the difference between primary and secondary insurance. Let’s dive into how these two plans differ below.
Primary insuranceYour primary plan is your main insurance that will cover your medical care first before your secondary insurance. For example, when you see the doctor or need to purchase prescription drugs, your primary insurance provider will cover the bills up to its coverage limits. Even with a primary plan, you may owe cost-sharing.
Secondary insuranceYour secondary insurance plan typically only kicks in after your primary plan has reached its coverage limits. If there’s anything left to pay after your primary insurer covers its portion of your healthcare expenses, that’s when your secondary plan takes effect.
How you can determine which insurance is primary and which is secondary
When deciding which plan is your primary coverage and which is your secondary, you actually don’t get to choose. Insurance carriers will cover you from your primary health plan whenever you file a claim as if you had no secondary plan. Afterward, your secondary health insurance plan will kick in and cover the remaining amount.
Health insurers have specific coordination of benefits rules if you have two health plans. While some of these rules will vary depending on your specific situation and health insurance company, some commonalities exist.
The following chart gives you basic guidelines to help you understand which plan will be your primary and which will provide secondary coverage:
What two types of plans are you coordinating?
Primary health coverage
Secondary health coverage
A spouse’s employer-sponsored plan and your own employer-sponsored plan.
Your employer-sponsored plan.
Your spouse’s employer-sponsored plan.
A student or employer-sponsored plan and a parent’s plan.
Your student or employer-sponsored plan.
Your parent’s plan.
Two parent plans.
If the policyholders are married parents, the birthday rule will apply. The parent with the earlier birthday will be the primary plan.
If the parents are divorced, the parent with custody will be the primary insurance plan.
The parent whose birthday comes second in a calendar year or, in cases of divorce, the parent who doesn’t have custody of the child.
Medicaid coverage and your own health plan.
Your health plan.
Pros and cons of having multiple health insurance policies
There are some advantages to having more than one health plan. Having dual coverage offers double benefits, which may mean more help with medical expenses since two plans can cover healthcare costs.
Additionally, if you have coverage through your parents’ plan or your spouse’s plan—as well as your own employer-sponsored health plan—you don’t have to worry about losing health insurance if you lose your job.
However, remember that combined health insurance coverage can’t exceed 100% of health costs. You’ll still be responsible for any cost-sharing under plan rules. This can potentially include both plans’ monthly premiums and applicable deductibles, so the extra costs can add up over time.
Keep in mind that having two separate plans can also make processing health insurance claims more challenging. This is especially true if you file a claim with one or both of your insurance companies.
If the cost of possibly paying more in cost-sharing is worth the additional coverage based on your current and future healthcare needs, then having dual insurance coverage could be the right choice for you.
Do you have to pay anything out-of-pocket if I have two health insurance plans?
Your primary and secondary insurance will cover expenses only up to their individual plan limits. After the secondary insurance pays out, you may still have an amount left over. Therefore, you may still have out-of-pocket expenses even with two separate health insurance plans.
As mentioned above, having two insurance plans may also mean additional premium payments and dealing with two separate deductibles. If you’re worried about potential out-of-pocket costs, you have some options.
If you have an employer who offers a health reimbursement arrangement (HRA), this additional benefit may come in handy. With an HRA, you can get your insurance premiums, annual deductibles, and other qualifying out-of-pocket expenses reimbursed, tax-free, up to a monthly allowance amount that’s set by your employer.
While traditional group plans restrict employees' medical coverage options, network providers, and set insurance premiums, a qualified small employer HRA (QSEHRA) or an individual coverage HRA (ICHRA) allows you to choose an individual insurance plan that works for you.
If your employer offers an integrated HRA, you can use it as a supplement for your group health insurance plan to cover additional costs like out-of-pocket medical expenses that aren't fully covered by your company plan.
You might not have an HRA from your employer, but if your company has a health stipend, you can use it as supplemental coverage. With a stipend, you can get reimbursed for various healthcare expenses. Stipends are essentially extra wages, so once you receive your stipend money, you can spend it on out-of-pocket costs that your primary or secondary plans don’t cover.
Even though stipend money is considered taxable income for employees, they’re flexible enough to give every employee value and added financial support for their medical services and items.
Simply put, with either an HRA or stipend, you can use your health benefit to purchase the best items and services for your personal health, budget, and family situation.
Whether you’re a young adult still on a parent’s plan, you qualify for Medicaid, or you're a married couple with two health insurance plans, there are many reasons why someone might be covered by two different health insurance plans.
If you decide to stick with dual insurance coverage, it’s essential to understand how your plans work together to get the most bang for your buck. Coordinating your two health insurance policies may be tricky at first, but by following the guidelines in this article, you’ll be well on your way to managing combined coverage like a pro.
This article was originally published on December 29, 2021. It was last updated on December 15, 2023.
Elizabeth Walker is a content marketing specialist at PeopleKeep. She has worked for the company since April 2021. Elizabeth has been a writer for more than 20 years and has written several poems and short stories, in addition to publishing two children’s books in 2019 and 2021. Her background as a musician and love of the arts continues to inspire her writing and strengthens her ability to be creative.