What is the purpose of the coordination of benefits (COB) provision?

The coordination of benefits (COB) provision is designed to avoid duplication of benefit payments when a person has multiple health insurance policies. In situations where an individual is covered by more than one health insurance plan, COB ensures that the total benefits paid by all carriers do not exceed the total cost of services provided.

This provision establishes a standardized process for determining which insurance policy pays first (primary) and which pays second (secondary). By coordinating the benefits among the different insurers, COB prevents the insured from receiving more financial compensation than the actual incurred expenses, thereby maintaining the integrity of the insurance system. This is crucial in managing costs across insurers and ensuring that claims are paid in an orderly manner.

In contrast, limiting the number of policies or enhancing policy coverage does not directly relate to the primary function of COB. Additionally, while avoiding denial of claims can be an indirect result of effective COB, it is not the primary goal of this provision. The core purpose is centered on preventing the duplication of benefits, ensuring that individuals are not placed in a position to profit from their health insurance coverage.