Sec. 52.23. Coordination of benefits

(a) This section is intended to establish uniformity in the permissive use of overinsurance provisions and to avoid claim delays and misunderstandings that could otherwise result from the use of inconsistent or incompatible provisions among plans.

(b) A coordination of benefits (COB) provision is one that is intended to avoid claims payment delays and duplication of benefits when a person is covered by two or more plans providing benefits or services for medical, dental or other care or treatment. It avoids claims payment delays by establishing an order in which plans pay their claims and providing the authority for the orderly transfer of information needed to pay claims promptly. It avoids duplication of benefits by permitting a reduction of the benefits of a plan when, by the rules established by this section, it does not have to pay its benefits first.

(c) This section permits, but does not require, plans to include COB provisions.

(d) If a plan includes a COB provision, it must be consistent with this section. A plan that does not include such a provision may not take the benefits of another plan into account when it determines its benefits. There are two exceptions:

(1) a contract holder's coverage that is designed to supplement a part of a basic package of benefits may provide that the supplementary coverage shall be excess to any other parts of the plan provided by the contract holder; and

(2) any noncontributory group or blanket insurance coverage which is in force on January 1, 1987 which provides excess major medical benefits intended to supplement any basic benefits on a covered person may continue to be excess to such basic benefits.

(e) Plan—definition.

(1) A plan is a form of coverage written on an expense-incurred basis with which coordination is allowed. The definition of plan in a contract must state the types of coverage which will be considered in applying the COB provision of that contract.

(2) This section uses the term plan. However, a contract may, instead, use program or some other term.

(3) Plan shall not include individual or family:

(i) insurance contracts;

(ii) direct-payment subscriber contracts;

(iii) coverage through health maintenance organizations (HMO's); or

(iv) coverage under other prepayment, group practice and individual practice plans.

(4) Plan may include:

(i) group insurance and group or group remittance subscriber contracts;

(ii) uninsured arrangements of group coverage;

(iii) group coverage through HMO's and other prepayment, group practice and individual practice plans; and

(iv) blanket contracts, except as stated in paragraph (7) of this subdivision.

(5) Plan may include the medical benefits coverage in group and individual mandatory automobile “no-fault” and traditional mandatory automobile “fault”type contracts.

(6) Plan may include Medicare or other governmental benefits. That part of the definition of plan may be limited to the hospital, medical and surgical benefits of the governmental program. However, plan shall not include a State plan under Medicaid, and shall not include a law or plan when, by law, its benefits are excess to those of any private insurance plan or other nongovernmental plan.

(7) Plan shall not include blanket school accident coverages or such coverages issued to a substantially similar group as defined in section 52.70(d)(6) of this Part where the policyholder pays the premium.

(f) This plan—definition.

(1) In a COB provision, the term this plan refers to the part of the contract providing the health care benefits to which the COB provision applies and which may be reduced on account of the benefits of other plans. Any other part of the contract providing health care benefits is separate from this plan.

(2) A contract may apply one COB provision to certain of its benefits (such as dental benefits), coordinating only with like benefits, and may apply other separate COB provisions to coordinate other benefits.

(g) Primary plan—definition.

(1) A primary plan is one whose benefits for a person's health care coverage must be determined without taking the existence of any other plan into consideration. A plan is a primary plan if either:

(i) the plan either has no order of benefit determination rules, or it has rules which differ from those permitted by this section; or

(ii) all plans which cover the person use the order of benefit determination rules required by this section and under those rules the plan determines its benefits first.

(2) There may be more than one primary plan (for example, two plans which have no order of benefit determination rules).

(h) Secondary plan—definiton.

A secondary plan is one which is not a primary plan. If a person is covered by more than one secondary plan, the order of benefit determination rules of this section decide the order in which their benefits are determined in relation to each other. The benefits of each secondary plan may take into consideration the benefits of the primary plan or plans and the benefits of any other plan which, under the rules of this section, has its benefits determined before those of that secondary plan.

(i) Allowable expense—definition.

(1) Allowable expense is the necessary, reasonable, and customary item of expense for health care, when the item of expense is covered at least in part under any of the plans involved, except where a statute requires a different definition. However, items of expense under coverages such as dental care, vision care, prescription drug or hearing aid programs may be excluded from the definition of allowable expense. A plan which provides benefits only for any such items of expense may limit its definition of allowable expenses to like items of expense.

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

(3) The difference between the cost of a private hospital room and the cost of a semiprivate hospital room is not considered an allowable expense under the above definition unless the patient's stay in a private hospital room is medically necessary in terms of generally accepted medical practice.

(4) When COB is restricted in its use to specific coverage in a contract (for example, major medical or dental), the definition of allowable expense must include the corresponding expenses or services to which COB applies.

(j) Claim — definition.

(1) A claim is a request that benefits of a plan be provided or paid. The benefits claimed may be in the form of:

(i) services (including supplies);

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

(iii) a combination of subparagraphs (i) and (ii) of this paragraph.

(k) Claim determination period — definition.

(1) A claim determination period is the period of time, which must not be less than 12 consecutive months, over which allowable expenses are compared with total benefits payable in the absence of COB, to determine:

(i) whether overinsurance exists; and

(ii) how much each plan will pay or provide.

(2) A claim determination period is usually a calendar year, but a plan may use some other period of time that fits the coverage of the contract. A person may be covered by a plan during a portion of a claim determination period if that person's coverage starts or ends during the claim determination period.

(3) As each claim is submitted, each plan is to determine its liability and pay or provide benefits based upon allowable expenses incurred to that point in the claim determination period. But that determination is subject to adjustment as later allowable expenses are incurred in the same claim determination period.

(l) A group contract may not reduce benefits on the basis that:

(1) another plan exists;

(2) except with respect to part B of Medicare, that person is or could have been covered under another plan; or

(3) a person has elected an option under another plan providing a lower level of benefits than another option which could have been elected.

(m) No plan may contain a provision that its benefits are excess or always secondary to any plan except in accordance with this subdivision or subdivision (d) of this section. A contract as described in paragraph (e)(7) of this section or a blanket accident insurance policy issued in accordance with General Business Law section 1015.11 may contain a provision that its benefits are excess or always secondary to any plan.

(n) Order of benefit determination rules.

(1) The primary plan must pay or provide its benefits as if the secondary plan or plans did not exist. A secondary plan may take the benefits of another plan into account only when, under these rules, it is secondary to that other plan.

(2) When there is a basis for a claim under more than one plan, a plan with a coordination of benefits provision complying with this section is a secondary plan which has its benefits determined after those of the other plan, unless the other plan has a COB provision complying with this section in which event the order of benefit determination rules will apply.

(3) The order of benefit payments is determined using the first of the following rules which applies:

(i) the benefits of a plan which covers the person as an employee, member or subscriber (that is, other than as a dependent) are determined before those of a plan which covers the person as a dependent;

(ii) except as stated in subparagraph (iii) of this paragraph, when a plan and another plan cover the same child as a dependent of different persons, called parents:

(a) the benefits of the plan of the parent whose birthday falls earlier in a year are determined before those of the plan of the parent whose birthday falls later in that year; but

(b) if both parents have the same birthday, the benefits of the plan which covered the parent longer are determined before those of the plan which covered the other parent for a shorter period of time;

(c) if the other plan does not have the rule described above, but instead has a rule based upon the gender of the parent, and if, as a result, the plans do not agree on the order of benefits, the rule in the other plan will determine the order of benefits;

(d) the word birthday refers only to month and day in a calendar year, not the year in which the person was born;

(e) a contract which includes COB and which is issued or renewed, or which has an anniversary date on or after January 1, 1987 shall include the substance of this subparagraph;

(iii) if two or more plans cover a person as a dependent child of divorced or separated parents, benefits for the child are determined in this order:

(a) first, the plan of the parent with custody of the child;

(b) then, the plan of the spouse of the parent with custody of the child;

(c) finally, the plan of the parent not having custody of the child; and

(d) if the specific terms of a court decree state that one of the parents is responsible for the health care expenses of the child, and the entity obligated to pay or provide the benefits of the plan of that parent has actual knowledge of those terms, the benefits of that plan are determined first. This paragraph does not apply with respect to any claim determination period or plan year during which any benefits are actually paid or provided before the entity has that actual knowledge;

(iv) the benefits of a plan which covers a person as an employee who is neither laid off nor retired (or as that employee's dependent) are determined before those of a plan which covers that person as a laid off or retired employee (or as that employee's dependent). If the other plan does not have this rule, and if, as a result, the plans do not agree on the order of benefits, this subparagraph is ignored;

(v) if none of the above rules determines the order of benefits, the benefits of the plan which covered an employee, member or subscriber longer are determined before those of the plan which covered that person for the shorter time.

(a) To determine the length of time a person has been covered under a plan, two plans shall be treated as one if the claimant was eligible under the second within 24 hours after the first ended. Thus, the start of a new plan does not include:

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

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

(3) a change from one type of plan to another (such as, from a single employer plan to that of a multiple employer plan).

(b) The claimant's length of time covered under a plan is measured from the claimant's first date of coverage under that plan. If that date is not readily available, the date the claimant first became a member of the group shall be used as the date from which to determine the length of time the claimant's coverage under the present plan has been in force.

(o) Reduction in a plan's benefits when it is secondary.

(1) A secondary plan may reduce its benefits in accordance with subparagraph (i), (ii) or (iii) of this paragraph, or any version thereof which is more favorable to a covered person:

(i) a secondary plan may reduce its benefits so that the total benefits paid or provided by all plans during a claim determination period are not more than total allowable expenses. The amount by which the secondary plan's benefits have been reduced shall be used by the secondary plan to pay allowable expenses, not otherwise paid, which were incurred during the claim determination period by the person for whom the claim is made. As each claim is submitted, the secondary plan determines its obligation to pay for allowable expenses based on all claims which were submitted up to that point in time during the claim determination period;

(ii) a secondary plan may reduce its benefits so that the total benefits paid or provided by all plans during a claim determination period are not more than a stated percentage, but not less than 80 percent, of total allowable expenses. The amount by which the secondary plan's benefits have been reduced shall be used by the secondary plan to pay the stated percentage of allowable expenses, not otherwise paid, which were incurred during the claim determination period by the person for whom the claim is made. As each claim is submitted, the secondary plan determines its obligations to pay for the stated percentage of allowable expenses based on all claims which were submitted up to that point in time during the claim determination period;

(iii) a secondary plan may reduce its benefits by the amount of the benefits payable under the other plans for the same expenses. This alternative may be used in a plan only when, in the absence of COB, the benefits of the plan (excluding benefits for dental care, vision care, prescription drug or hearing aid programs) will, after any deductible, be:

(a) not less than 50 percent of covered expenses:

(1) for the treatment of mental or nervous disorders or alcoholism or drug abuse; or

(2) under cost containment provisions with alternative benefits, such as those applicable to second surgical opinions, precertification of hospital stays, etc.; and

(b) not less than 75 percent of other covered expenses.

(2) In order to utilize the reduction permitted in subparagraph (1)(ii) or (iii) of this subdivision, the following conditions must be met:

(i) the plan must provide prior notice to employees or members that when it is secondary (that is, it determines benefits after another plan) its benefits plus those of the primary plan will be less than 100 percent of allowable expenses unless the primary plan, by itself, provides benefits at 100 percent of allowable expenses;

(ii) when the plan is secondary, it must provide a limit on the amount the employee, member or subscriber is required to pay toward the expenses or services covered under the plan and for which the plan is secondary. Such limit shall not exceed $2,000 for any covered person, or $3,000 for any family in any claim determination period;

(iii) the plan must permit a person to be enrolled for its health care coverage when that person's eligibility for health care coverage under another plan ends for any reason, if such person is eligible for coverage under the plan and such enrollment is made before the end of the 31-day period immediately following the date when health care coverage under the other plan ends or the end of any continuation period elected by or for that person. This unrestricted enrollment is not required if a person remains eligible for coverage under that other plan, or a plan which replaces its, without interruption of that person's coverage; and

(iv) if a person is enrolled before the end of the period, described in subparagraph (iii) of this paragraph, there shall be no interruption of coverage. Requirements concerning active work of employees, members or subscribers, or nonconfinement of dependents on the effective date of coverage, shall not be applied by the plan. However, the plan may apply the same requirements such as benefit restrictions, waiting periods, and preexisting condition limitations that were in effect on the date set forth in clause (a) or (b) of this subparagraph, whichever is applicable:

(a) if such person was not covered by the plan, the date the person first became eligible for the plan's coverage; or

(b) if such person was covered by the plan, the date the person last became covered under the plan. Credit shall be given under any preexisting condition or waiting period requirements for the period of time from the applicable date described in clause (a) or (b) of this subparagraph to the date the person actually enrolled in the plan pursuant to this subparagraph.

(p) An insurer has the right to decide which facts it needs in order to implement a COB provision. It may get needed facts from or give them to any other organization or person. The insurer need not tell or get the consent of, any person to do this except as required by article 25 of the New York General Business Law. Each person claiming benefits under a plan must give the insurer any facts it needs to pay the claim.

(q) A payment made under one plan may include an amount which should have been paid under another plan. If it does, the insurer of the plan responsible for that payment may pay that amount to the organization which made that payment. That amount will then be treated as though it were a benefit paid under the plan which was primarily responsible for that payment. The insurer will not have to pay that amount again. The term payment made includes providing benefits in the form of services, in which case payment made means reasonable cash value of the benefits provided in the form of services.

(r) Right of recovery. Subject to the provisions of section 217-2.2(c) of this Title (Regulation No. 178).

(1) If the amount of the payments made by an insurer is more than it should have paid under its COB provision, it may recover the excess from one or more of:

(i) the persons it has paid or for whom it has paid;

(ii) insurance companies; or

(iii) other organizations.

(2) A secondary plan which provides benefits in the form of services may recover the reasonable cash value of providing the services from the primary plan, to the extent that benefits for the services are covered by the primary plan and have not already been paid or provided by the primary plan. Nothing in this subdivision shall be interpreted to require a plan to reimburse a covered person in cash for the value of services provided by a plan that provides benefits in the form of services.

(s) A plan with order of benefit determination rules which comply with this section (complying plan) may coordinate its benefits with a plan which is excess or always secondary or which uses order of benefit determination rules which are inconsistent with those contained in this section (noncomplying plan) on the following basis:

(1) if the complying plan is the primary plan, it shall pay or provide its benefits on a primary basis;

(2) if the complying plan is the secondary plan, it shall, nevertheless, pay or provide its benefits first, but the amount of the benefits payable shall be determined as if the complying plan were the secondary plan. In such a situation, such payment shall be the limit of the complying plan's liability; and

(3) if the noncomplying plan does not provide the information needed by the complying plan to determine its benefits within 30 days after it is requested to do so, the complying plan shall assume that the benefits of the noncomplying plan are identical to its own, and shall pay its benefits accordingly. However, the complying plan must adjust any payments it makes based on such assumption whenever information becomes available as to the actual benefits of the noncomplying plan.