Coordination of Benefits vs. Explanation of Benefits

If you’re enrolled in a group benefits plan, you've likely come across the terms Coordination of Benefits (COB) and Explanation of Benefits (EOB). Each of these terms has to do with submitting claims and receiving reimbursement, so it’s important you know and understand what they mean!

In this blog, we’ll outline the details of COBs and EOBs and describe the connection between them, so you’ll be able to submit claims easier and without confusion. 

What is a Coordination of Benefits?

An Employee Benefits plan is centered around receiving health services, as well as paying and adjudicating claims. When you use a service that is part of your health plan (massage, chiropractic, etc.), you’ll need to submit a claim to be reimbursed for the amount that you are covered for. Once submitted, your insurance company is responsible for paying your claim and providing you with a record of that payment.

Spouse Coverage

In some cases, if your spouse is also part of an employer-sponsored group benefits plan, you may be eligible for additional coverage under their plan as well. This comes in handy if your benefits plan only covers a percentage of a service (ex. If only 80% of your massage therapy is covered under your health plan, you may be able to submit the remaining 20% under your spouse’s plan). Figuring out how to coordinate between both plans is where Coordination of Benefits comes in.

Coordination of Benefits (COB) describes the claims process for an employee with a spouse/dependent who also has group coverage elsewhere.

Dependents

A dependent is a person (e.g. spouse, child) who relies on you financially that you add to your group benefits plan so they have benefits, or you are included in theirs. The rules of COBs outline which plan pays first and how benefits are calculated when claims are made to more than one group plan. This is common especially among families with two working adults that each have group benefits that are using their insurance for their child dependents. 

Which Plan Do I Submit My Claim To?

The company that provides your insurance will likely take care of the nitty-gritty details in terms of payment, but there are some things that you should know regarding common issues that happen with a COB.

Here are some general rules when it comes to COBs.

• If you are a member under a plan, you must submit the claim to your own plan first. However, if you have the same status under more than one plan, the plan that covered you the longest pays first.
  • For example, if you have two part-time jobs with benefits, one that started in 2018 and one that started in 2019, you would submit your claim to the plan that was started in 2018 and it will also be the one that pays first.
• If you and your dependent spouse both have employee benefits and you want to use those benefits for a child, the primary payer (the first payer responsible for claim processing) is decided by the birthday rule. This means that whoever’s birthday (you or your spouse) is earlier by month and day in the calendar year is the plan who pays first. If both parent’s birthdays happen to be on the same day, the parent whose first name appears first in the alphabet pays first.
  • For example, for two parents that have a child covered under both plans with birthdays on October 11 and September 21, the parent with the September birthday will pay the claim first. 

Of course, there are other cases such as for retired people or post-secondary students. For those cases, refer to your employee booklet or contact your plan administrator for more information, so you know how to submit your claims properly. 

What happens if I make a mistake?

Well, if you accidentally submit a claim to the wrong insurance provider, it will likely get denied. However, the easy fix to this is to just resubmit it to the right provider. 

It’s important to always keep your dependent information up to date, so when you submit claims, they are processed correctly and won’t get denied. Any time your dependent information is changed, including the birth of a child, or divorce, you should contact your plan administrator with the updates. 

What is an Explanation of Benefits?

An explanation of benefits (EOB) is a statement that includes details about a medical insurance claim that explains what portion was paid to the health provider and how much the employee is responsible to pay out-of-pocket. This is generated and sent once it has been fully adjudicated or processed.

• EOBs are provided any time an employee makes a claim for an extended health care service. The key thing to keep in mind about EOBs is that they are not bills, they are only for your reference to how much you will owe. 
• Since EOBs are more of a record of payment rather than a bill, you don’t have to do much with an EOB. You may receive an actual bill later if you owe money for your claim, but typically you can file away your EOB for reference.
• EOBs help you understand the value that you get out of our insurance plan. Simply Benefits stores all of your previous EOBs on your employee profile so you can reference them whenever you need to. 

How are they Connected?

EOBs and COBs go hand in hand. The EOB that you receive after you submit a claim can and will be used to receive a COB from another insurance provider.

• For example, With Simply Benefits, when you submit any kind of claim, you’ll receive an EOB. If your plan doesn’t cover the full amount, and you want your spouse's plan to cover the rest, you’ll send the EOB along with the original receipt to your spouse's health insurer. They’ll take care of the rest of the payment, and you may or may not receive another EOB from the other health insurer.

Final Thoughts

Hopefully, you now have a better understanding of how EOBs and COBs work, so the next time you submit a claim you'll know the process making it easier for you with faster reimbursement.  

If you’re a Simply Benefits plan member, talk to your plan administrator or contact our Support Team to find out details about your coordination of benefits and what to expect from an EOB. 

Watch how easy it is to submit a claim through Simply Benefits!

Other Helpful Employee Resources

• Employee Health Benefits Coverage in 5 Minutes
• How Employee Group Life Insurance Works
• Health Spending Accounts for Canadians Explained

About Simply Benefits

Simply Benefits is a Third Party Payor (TPP) that provides Employee Health Benefits 100% digitally through our Canadian Advisor partners. Our all-in-one digital solution provides three portals that enable Benefits Advisors to digitally manage all client plans online, Employers to efficiently administer employee coverage, and Employees to view, update and use their benefits 24/7 via desktop or smartphone app.

We help ENGAGE Employees Anytime, Anywhere, SIMPLIFY the Benefits Experience, and EVOLVE an Advisors’ Benefits Business.

Connect with us at simplybenefits.ca or on LinkedIn, Twitter, Facebook, Instagram, and YouTube.

Employee Benefits Made Simple.