Indiana State Life and Health Insurance Practice Exam

Jill is covered under two Group Health policies from her employer and her husband's employer. Which policy provision dictates the primary coverage if she suffers a loss?

1. Replacement

2. Time Payment of Claims

3. Notice of Claim

4. Coordination of Benefits

The correct answer is: Coordination of Benefits

The concept of Coordination of Benefits is crucial when an individual is covered under multiple health insurance policies. In Jill's situation, with coverage from both her employer and her husband's employer, this provision determines which insurance will pay first (primary coverage) and which will pay second (secondary coverage) if she incurs medical expenses. This provision is designed to prevent overinsurance, ensuring that benefits do not exceed the total cost incurred. It typically involves rules that establish the order of payment based on factors such as the policyholder's employment status, which group plan has been in effect longer, and other criteria. Thus, when Jill suffers a loss, the Coordination of Benefits provision provides a systematic approach to managing claims between the two insurers, establishing which plan will cover the expenses first. Other provisions listed, such as Replacement, Time Payment of Claims, and Notice of Claim, do not address the coordination of benefits between multiple policies and are more focused on different aspects of claims or coverage.