Take 2 - Fall 1999

Coordination of Benefits

Coordination of Benefits (COB) is a method of dividing responsibility of payment of medical bills among various health plans, including Medicare, which cover Participants and their qualified dependents. The following article briefly reviews the Plan's COB rules and explains the new rule for coordination of benefits with HMO's.

New Rule for Coordination with HMO's

The Board of Trustees has amended the Health Plan with respect to coordination of benefits with Health Maintenance Organizations (HMO's). Effective January 1, 2000, if you or your dependent have primary coverage with an HMO, but do not use the HMO network providers, the SAG Health Plan's benefits will be reduced by 80%. In other words, the maximum the Plan would pay is 20% of the allowable amount on the claim.

This change affects COB with HMO coverage you or your dependents may have through Medicare, another employer or privately. It is extremely important that you use your HMO when it is your primary plan. If you do not, your benefits under this Health Plan are reduced and you will have much larger out of pocket expenses.

Determining the Primary Plan

There are rules the Health Plan follows to determine which Plan is primary. The basic rules are as follows:

  1. If you are covered by any plan that does not have a COB provision, then that Plan is primary.

  2. The plan that covers you as a participant is primary over a plan which covers you as a dependent.
  3. The plan that covers you as an active participant is primary to the plan covering you as a retiree or a self-pay participant.
  4. If you have the same type of eligibility (for example, Earned) under more than one plan, then the plan under which you have had the longest continuous eligibility is your primary plan.

     

The first rule that applies to the situation is the one that is used.

Special Rules for Dependents

The rules for determining which plan is primary for dependent children are different. In cases where the parents are not divorced, this Plan uses the "birthday rule". This means that the plan of the parent whose birthday occurs earlier in the calendar year is primary. For dependent children of divorced parents, a separate set of rules applies. Please contact the Plan Office to determine the child's primary plan.

It is important to know whether Medicare is the primary plan for either you or your dependent, especially if you are enrolled in a Medicare HMO. Under the new rule effective January 1, 2000, when a Medicare HMO is primary and the covered person fails to use the Medicare HMO providers, this Plan's benefits will be reduced by 80%.

How Medicare Looks At Your Earnings

Federal law requires that the SAG-Producers Health Plan be primary to Medicare for all "active" participants. However, Medicare's definition of "active" only considers sessional earnings, and not residuals.

 

If You Earn $7,500* or more in

You Are

Primary Plan

Secondary Plan

All Sessions

Active

SAG-Producers Plan

Medicare

All Residuals

Inactive

Medicare

SAG-Producers Plan

Combination of Residuals and Sessions but less than $7,500 in sessions

Inactive

Medicare

SAG-Producers Plan

 

* The current minimum Earnings requirement for Health Plan eligibility.

As you can see from the chart, it is possible for you to meet the minimum earnings requirement for Health Plan benefits and still be considered "inactive" by Medicare which means that Medicare is your primary plan. Also, Federal law requires that an active plan under which you are covered be primary to Medicare. For example, if you have Retiree coverage with the SAG-Producers Health Plan and are also covered as a dependent under your spouse's active plan, your spouse's plan is primary, Medicare is secondary and the SAG-Producers Plan is third. The Plan Office will notify you of any change in your eligibility under this Plan.

Many of the rules involving coordination of benefits with Medicare are confusing and even your doctor's office may not be sure who is primary. Ask them to contact our office directly and we will be happy to advise them as to who is your primary plan so they can properly file your claims.

Three Situations That Reduce Plan Benefits by 80% for Medicare Beneficiaries

  1. If you fail to enroll in Medicare Part B when the SAG-Producers Plan is secondary.

 

Traditional Medicare involves two parts: Part A which covers hospital charges costs you nothing. Part B which covers doctor's bills and other medical care involves a monthly premium. If you fail to enroll in Medicare Part B when this Plan is secondary to Medicare, this Plan's benefits will be reduced by 80%.

 

  1. If you use a doctor who has opted out of Medicare.

 

Medicare allows doctors the opportunity to opt out of the Medicare system and contract directly with patients to provide treatment outside of Medicare. A doctor who has opted out of Medicare must inform the patient that his or her services will not be covered by Medicare, and the doctor and patient must sign a written contract in which the patient agrees that the doctor's charges will not be paid by Medicare. If you or your spouse use the services of a doctor who has opted out of Medicare, this Plan's benefits will be reduced by 80%.

 

  1. If you fail to use a Medicare HMO provider when Medicare is primary.

 

Medicare beneficiaries have a choice between traditional Medicare (Parts A and B) or a Medicare HMO. If you or your spouse are enrolled in a Medicare HMO as your primary plan, but do not use the HMO network providers, this Plan's benefits will be reduced by 80%.

 

 

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