What does Coordination of Benefits allow in health plans?

Coordination of Benefits (COB) is a process used in health insurance to determine the order in which multiple health plans pay for covered health care services. The purpose of COB is to ensure that the total benefits paid by all insurers do not exceed the total cost of the claim, which is where the correct option comes into play.

The correct answer indicates that the secondary payer is allowed to adjust its payments to ensure that the total reimbursement does not exceed 100% of the eligible claim amount. This means if one health plan (the primary payer) pays a portion of the claim, the secondary payer will only cover the remaining balance up to the total amount of the claim, but not surpassing that. The principle behind this is to prevent overpayment and ensure that there is no duplication of benefit payments for the same service.

The structure of health insurance plans relies on this coordination to delineate responsibility between insurers, thus preventing a situation where an individual receives more than the total cost of the healthcare service they received. This keeps the insurance system efficient and fair, ensuring that insurance remains sustainable for providers and payers alike.

Understanding this concept is vital in health insurance, as it directly affects how claims are processed and paid. It ensures that patients receive the