Primary & Secondary Insurance
The existence of primary and secondary insurance arise when an a person is insured more than once. There are actually a lot of people nowadays who have more than one available insurance from different plans. This may be because they have taken an insurance for themselves or that they are covered under a health group insurance plan.
Primary health insurance therefore is one that is purchased by the individual himself after going through an application. It may also be coverage that he got through his employment. It is really to ensure that he would be taken cared of in case something happens to him, thus relieving his financial worries or that of his family's when he is gone.
Secondary health insurance, on the other hand, is the result of being made a dependent in other people's insurance coverage, like that of the spouse or other family member. It provides reimbursement for medical expenses of the dependent. Thus, primary insurance shall be for the insured himself and secondary insurance shall be for the dependent.
There is a need to distinguish between primary and secondary coverage because insurance companies want to prevent double recovery. Double recovery happens when the insured recovers from his available medical insurance and from another insurance plan to which he is a dependent.
To address this issue, insurance companies usually insert a provision in their plans on how primary and secondary coverage will be determined. This is important for them so that they would be able to avoid paying for a medical expense that has already been compensated. Understandably, they have a rule that people must not gain from their insurance.
In case of claims, the primary insurance coverage normally pays and then the secondary insurance only pays after exhaustion of coverage available through the primary plan. The insurance company responsible for the secondary coverage will process claims when there is already information from primary. For example, the insured husband would first file a claim to his primary and, if that insurance company does not pay for everything, the balance can be presented to the secondary for possible additional coverage. The two insurance companies, however, will not pay in excess of what is allowed by them.