Is the patient covered?
Active coverage on the date of service, with the right plan and the right member.
Confirms identity, plan, effective dates and network status.
Eligibility, Benefits and Coordination of Benefits
Before a provider can be paid, someone has to confirm the patient is covered, learn what the plan will pay for the specific service, and work out which plan pays first when there is more than one. This tutorial walks through each step, the plans and payers involved, the electronic transactions behind them, and the rules that decide who pays.
What will the plan pay?
Coverage, cost sharing and rules for this particular service.
Deductible left, copay or coinsurance, limits, prior authorization and referrals.
Who pays first?
The order of payment when two or more plans cover the patient.
Primary, secondary and tertiary, set by NAIC rules and federal law.
The big picture
Eligibility, benefits verification and coordination of benefits make up the front end of the revenue cycle. They happen before or at the visit, and almost everything that goes wrong later traces back to them.
A claim sent to the wrong plan, for a member whose coverage ended last month, or for a service that needed authorization, is denied no matter how well the care was documented or coded. Fixing it afterwards costs staff time, delays payment, and often lands on the patient as an unexpected bill. Getting the front end right is the cheapest way to get paid correctly the first time.
Who is involved
- Patient
- The person receiving care. May or may not be the person who holds the policy.
- Subscriber
- Also called the policyholder, insured or member of record. The person whose employment, enrollment or purchase created the coverage.
- Dependent
- A spouse, child (generally to age 26 under the ACA) or other person covered through the subscriber.
- Payer
- The organization that adjudicates and pays claims: an insurance company, a government program, or an administrator acting for a self-funded employer.
- Plan sponsor
- The employer, union or government entity that offers the plan. In a self-funded plan, the sponsor carries the financial risk.
- TPA / ASO
- A third-party administrator, or an insurer providing "administrative services only," that processes claims for a self-funded plan without insuring it.
- Provider
- The physician, hospital, lab or other entity delivering care and submitting the claim, identified by an NPI.
- Clearinghouse
- A company that routes standard electronic transactions between providers and payers and checks them for format errors.
- PBM
- A pharmacy benefit manager that runs the prescription benefit, often separately from the medical plan.
What goes wrong when the front end is skipped
Denials
Coverage terminated, member not found, another payer primary, authorization missing. These are among the most common reasons first-pass claims fail.
Rework and delay
Each denied claim needs research, correction and resubmission, often against a timely filing deadline.
Patient experience
Patients get bills they did not expect, or are asked for the wrong amount at check-in. Trust and collections both suffer.
Insurance building blocks
Every benefit check comes back as a set of cost-sharing values. Know these terms cold, because they are what you read in a 271, on a portal and on an EOB.
- Premium
- What the subscriber or employer pays to keep coverage in force, usually monthly. Not part of the claim, but unpaid premiums end coverage.
- Billed charge
- The provider's full list price for the service.
- Allowed amount
- The maximum the plan recognizes for a covered service. For in-network providers it is the contracted rate. Cost sharing is calculated on the allowed amount, not the billed charge.
- Contractual adjustment
- Billed charge minus allowed amount. An in-network provider writes this off and cannot bill the patient for it.
- Deductible
- What the member pays for covered services each plan year before the plan starts sharing cost. Preventive care under ACA-compliant plans is typically covered before the deductible.
- Copayment
- A fixed dollar amount per service, such as $30 for an office visit. Depending on plan design it may apply instead of, or in addition to, the deductible.
- Coinsurance
- A percentage of the allowed amount the member pays after the deductible, such as 20%.
- Out-of-pocket maximum
- The most the member pays in a plan year for covered in-network care (deductible, copays and coinsurance). After it is reached, the plan pays 100% of allowed amounts. Premiums never count toward it.
- Network
- Providers under contract with the plan. Out-of-network care may be covered at a lower level, or not at all, and may be balance billed where the law allows.
- Balance billing
- Billing the patient for the difference between the charge and the allowed amount. Prohibited for in-network providers, and limited by the No Surprises Act for emergencies and certain out-of-network care.
- Accumulators
- The running totals the payer tracks: deductible met, out-of-pocket met, visits used. Benefit checks report them as "remaining."
Details that change the math
Embedded vs. non-embedded deductibles
On family coverage, an embedded deductible gives each person their own deductible inside the family total, so one sick member can start getting coinsurance before the whole family reaches the family amount. A non-embedded (aggregate) deductible must be met in full by the family first. The ACA requires an embedded individual out-of-pocket limit no higher than the self-only maximum.
Plan year vs. calendar year
Accumulators reset at the start of the plan year. Many employer plans renew January 1, but some renew July 1 or on another date. A January check that shows "deductible met" may be reading last year's totals if the payer has not rolled over yet.
Medicare uses benefit periods
The Part A hospital deductible applies per benefit period, which starts at admission and ends after 60 days in a row without inpatient or skilled nursing care. A patient can owe it more than once a year. Part B uses a calendar-year deductible.
Network and place of service
The same CPT code can carry different cost sharing in an office, an outpatient hospital department or an ambulatory surgery center. Always verify benefits for the setting where the service will happen.
Anatomy of an insurance ID card
The card is a starting point, not proof of coverage. It can be outdated, and a card does not show whether premiums are paid. Scan front and back at every visit. This card is a fictional example.
Northwind HealthChoice PPO network
Gold PPO 1500
1MemberJORDAN DOE
2Member IDNWH123456789
3GroupGRP00451
5RxBIN / PCN610999 / NWRX
Deductible (in-net)$1,500 / $3,000
RxGRPNW451
PCP$30
Specialist$60
Urgent$75
ER$250
Providers
Payer ID 99999 7
8 Eligibility & benefits1-800-555-0142
Precertification1-800-555-0177
Pharmacy help desk1-800-555-0163
Medical claimsPO Box 0000, Springfield IL
9 Self-funded plan sponsored by Acme Manufacturing. Northwind Health provides administrative services only and does not insure benefits. Precertification required for inpatient stays and advanced imaging.
- 1Member name. The person this card belongs to. If the patient is a dependent, also capture the subscriber's name and date of birth.
- 2Member ID. The key for every eligibility request. Some payers add a two-digit suffix per family member. On Blue plans the first three characters are a prefix that routes out-of-area claims to the home plan.
- 3Group number. Identifies the employer or plan sponsor and the benefit package. Individual and Medicare cards often have none.
- 4Plan and network. Product name and network. The network printed here is the one your contract must match.
- 5RxBIN, PCN, RxGRP. Pharmacy routing codes. If they point to a different company, the drug benefit is carved out to a PBM.
- 6Copays. Helpful but often incomplete. They may not show whether the deductible applies first, and they change at renewal.
- 7Payer ID and claims address. Where electronic and paper claims go. The payer ID on the card is not always the one your clearinghouse uses.
- 8Provider phone lines. Separate numbers for eligibility, precertification and pharmacy are common. Note which line you called.
- 9Funding statement. "Administrative services only" means the plan is self-funded under ERISA, so state insurance mandates and state COB variations may not apply.
Plans and payers
Two questions classify almost any coverage: how the plan manages care (the network model) and where the coverage comes from (employer, individual market, or a government program). Each answer changes what you must verify.
Network models
| Model | Network | PCP and referrals | Out-of-network | What to verify |
|---|---|---|---|---|
| HMO Health maintenance organization | Closed | PCP assigned; referrals needed for specialists | Emergencies only | PCP on file, referral on file, provider in the HMO's network (not just the carrier's PPO) |
| EPO Exclusive provider organization | Closed | Usually no PCP or referrals | Emergencies only | Network participation for the specific product |
| PPO Preferred provider organization | Open | No PCP; no referrals | Covered at lower level, separate deductible | In- vs out-of-network benefits, prior authorization lists |
| POS Point of service | Hybrid | PCP and referrals for in-network level | Covered at lower level | Referral status decides which benefit level applies |
| HDHP High-deductible health plan | Any of the above | Depends on network model | Depends on network model | Deductible remaining; most services apply to the deductible first; may pair with an HSA |
| Indemnity Fee-for-service | None | None | Pays a percentage of "usual and customary" | Allowed basis, possible balance billing |
How the plan is funded
Fully insured
The employer buys a policy and the insurer carries the risk. Regulated by the state insurance department, so state mandates, prompt-pay laws and state COB rules apply.
Self-funded
The employer pays claims from its own funds and hires a TPA or an insurer (ASO) to run them. Governed by ERISA at the federal level and generally exempt from state insurance law. The card may carry a big carrier's logo.
Level-funded
A self-funded plan with fixed monthly payments and stop-loss coverage, popular with smaller employers. Treat it like self-funded for appeals and COB.
Where coverage comes from
Commercial · Employer group
The largest source of coverage for working-age people. Employer plans, union plans and the Federal Employees Health Benefits program. Dependents can stay on a parent's plan to age 26.
Commercial · Individual and Marketplace
Bought directly or through HealthCare.gov or a state exchange. ACA plans come in metal tiers (bronze, silver, gold, platinum) plus catastrophic plans. Many enrollees receive advance premium tax credits (APTC), which affects grace periods. The enhanced credits expired December 31, 2025, so more enrollees face higher premiums and lapses in 2026.
Continuation · COBRA
Lets people keep an employer plan (employers with 20+ employees) after a job loss or other qualifying event, usually for 18 months, at full cost. They have 60 days to elect, and coverage is retroactive once elected and paid. States have "mini-COBRA" laws for smaller employers.
Property and casualty
Workers' compensation pays for work-related injuries. Auto no-fault, PIP or MedPay pays for accident injuries in many states. Liability insurers pay when someone else is at fault. All are primary to health insurance for the related care.
Not insurance, or limited
Short-term plans are not ACA-compliant and may exclude pre-existing conditions. Health care sharing ministries are not insurance and guarantee nothing; treat members as self-pay. Supplemental products (accident, hospital indemnity, cancer) usually pay cash to the member, not the provider.
Carve-outs
Dental, vision, behavioral health and pharmacy are often run by a separate company. The medical plan's 271 may simply say "contact the following entity." Verify with the carve-out vendor directly.
Medicare
Federal coverage for people 65 and older, people under 65 with a qualifying disability (generally after 24 months of disability benefits), and people with end-stage renal disease (ESRD) or ALS.
| Part | Covers | Who runs it | Verification notes |
|---|---|---|---|
| Part A | Inpatient hospital, skilled nursing facility, hospice, some home health | CMS through Medicare Administrative Contractors (MACs) | Benefit period deductible; check prior inpatient and SNF days used, hospice election |
| Part B | Physician services, outpatient care, labs, DME, preventive services | CMS through MACs | Annual deductible, 20% coinsurance; check preventive frequency limits (for example, last annual wellness visit) |
| Part C Medicare Advantage | Replaces A and B (and usually D) with a private plan: HMO, PPO, PFFS or Special Needs Plan | Private insurers under contract with CMS | Bill the MA plan, not Original Medicare. Check network, referrals and the plan's own prior authorization rules |
| Part D | Outpatient prescription drugs | Private plans | Pharmacy benefit; 2026 out-of-pocket cap is $2,100 |
| Medigap Medicare Supplement | Pays Original Medicare deductibles and coinsurance; standardized lettered plans (A–N) | Private insurers | Secondary to Original Medicare; claims usually cross over automatically. Cannot be paired with Medicare Advantage |
The MBI
Medicare members are identified by an 11-character Medicare Beneficiary Identifier made of numbers and uppercase letters (it never uses S, L, O, I, B or Z). It replaced the Social Security-based number. Medicare eligibility checks run through the HIPAA Eligibility Transaction System (HETS), usually via a clearinghouse or a MAC portal.
Two common Medicare traps
- Medicare Advantage enrollment. A patient showing a red-white-and-blue card may have switched to an MA plan. The HETS response shows MA enrollment; claims sent to Original Medicare will deny.
- QMB status. Qualified Medicare Beneficiaries cannot be billed for Medicare deductibles, coinsurance or copays, even if Medicaid pays nothing.
Medicaid and CHIP
Joint federal-state programs for people with limited income, run by each state under its own name (for example Medi-Cal or NJ FamilyCare). Most states deliver Medicaid through managed care organizations (MCOs), so the patient may have a state ID and an MCO card. The Children's Health Insurance Program (CHIP) covers children in families above Medicaid limits.
- Verify every visit. Eligibility can change month to month. Use the state's eligibility verification system (portal, phone or 270/271).
- Check the MCO assignment and PCP. The state may show which MCO is responsible for each month.
- Spend-down and share of cost. Some members must incur a set amount of medical expenses before Medicaid pays.
- Payer of last resort. Medicaid pays after nearly every other source, including Medicare and commercial plans.
- Changes coming January 1, 2027. Expansion adults move to eligibility renewals every six months and work requirements, and retroactive coverage shrinks to one month before the application month for expansion adults and two months for others. Expect more mid-year terminations.
Military, veterans and tribal programs
TRICARE
Coverage for active duty members, retirees and families. Prime works like an HMO, Select like a PPO, and TRICARE For Life wraps around Medicare. TRICARE pays after other health insurance, except Medicaid, TRICARE supplements and the Indian Health Service.
VA and CHAMPVA
VA care, including Community Care, needs a VA referral or authorization, and the VA cannot bill Medicare. CHAMPVA covers certain family members of disabled or deceased veterans and is secondary to most other insurance.
Indian Health Service
Provides care to members of federally recognized tribes. By law it is generally the payer of last resort, after Medicaid and other coverage.
Eligibility verification
Eligibility verification confirms that the patient has active coverage with a specific payer on the date of service, and that the details you will bill under match the payer's records.
It is a yes-or-no question with a few qualifiers: who the member is, which plan they have, when coverage starts and ends, and whether your providers are in that plan's network. It does not tell you what a particular service will cost; that is benefits verification.
When to check
At scheduling
Catch missing or wrong insurance early, flag authorization needs, and give the patient time to fix coverage problems.
1–3 days before
Most practice systems send batch 270 requests for the next day's schedule. Work the exceptions before patients arrive.
On the date of service
Re-run a real-time check at check-in, especially early in the month, in January, and for Medicaid. Recurring patients (therapy, dialysis, infusion) need a check at least monthly.
What to collect from the patient
- Front and back of every insurance card, plus a photo ID to prevent identity errors and fraud.
- Patient's legal name, date of birth, sex and address, exactly as the plan has them.
- Subscriber's name, date of birth and relationship to the patient when the patient is a dependent.
- Employer name and whether the subscriber is actively working (needed for COB and Medicare).
- Every other coverage the patient has, asked as an open question: "Do you have any other insurance, including Medicare, Medicaid, a spouse's plan, or coverage through a parent?"
- Whether the visit relates to an injury at work or an accident.
How to check
| Method | Best for | Notes |
|---|---|---|
| Real-time 270/271 | Routine checks from the practice or hospital system | HIPAA-standard request and response. Fast, structured, and auditable. Detail varies by payer. |
| Batch 270/271 | Next-day schedules and recurring patients | Run overnight; staff work only the rejections and changes. |
| Payer portals | Detail the 271 leaves out: auth rules, plan documents, accumulators by service | Multi-payer portals cover many plans with one login. Screenshot or save the page with the date. |
| Medicare HETS | Original Medicare, MA enrollment, MSP records, Part A days used | Accessed through a clearinghouse or MAC portal using the MBI. |
| State Medicaid system | Medicaid and CHIP eligibility, MCO assignment, spend-down | Portal, phone (IVR) or 270/271, depending on the state. |
| Phone | Complex cases, conflicting data, specific services | Always record the representative's name, date, time and call reference number. |
| Insurance discovery | Self-pay patients and wrong-plan rejections | Searches payers using demographics to find coverage the patient did not report. |
What to confirm
Situations that fool a simple "active" check
| Situation | What happens | What to do |
|---|---|---|
| Marketplace grace period (with APTC) | Enrollees receiving advance premium tax credits get a 3-month grace period. The plan pays claims in month 1 and may pend claims in months 2 and 3. If premiums stay unpaid, coverage ends retroactively to the last day of month 1. | Look for grace-period indicators on the 271 or portal. Collect or set expectations with the patient for services in months 2–3. |
| Other grace periods | Off-exchange and employer plans follow state law or plan terms, often about 30 days. | Ask the payer whether claims will pend. |
| COBRA election window | A former employee can show as terminated for up to 60 days, then elect and pay, and coverage is reinstated back to the loss date. | Hold the claim or collect a deposit; recheck after the election period. |
| Retroactive termination | Employers report terminations late, so coverage can be ended retroactively after you are paid. The payer then recoups. | Verify close to the service date and keep proof of the eligibility response. |
| New plan year or new job | January brings new plans, new IDs and reset deductibles. | Re-verify everyone at their first visit of the year and rescan cards. |
| Medicare Advantage switching | The annual election period runs October 15 to December 7, with changes effective January 1. The MA open enrollment period (January 1 to March 31) allows another switch. | Re-verify Medicare patients in January and again in the spring. |
| Newborns | A newborn may be covered under a parent's plan from birth if added within the plan's window (often 30–31 days). Babies born to Medicaid-enrolled mothers are generally deemed eligible for their first year. | Do not bill under the mother's ID unless the payer instructs it. Track the enrollment deadline. |
| Dependents turning 26 | Coverage usually ends at the end of the month (or year) of the 26th birthday, per plan terms. | Watch dates of birth near the cutoff. |
Verification of benefits
Verification of benefits (VOB, or benefits verification) takes eligibility a step further: for this service, in this setting, with this provider, what does the plan cover, what are the rules, and what will the patient owe?
| Eligibility | Verification of benefits | |
|---|---|---|
| Question | Is the patient covered? | Is this service covered, and on what terms? |
| Scope | The member and the plan | A specific service, code, setting and provider |
| Typical output | Active / inactive, dates, plan, network | Deductible and OOP remaining, copay, coinsurance, limits, auth and referral rules, exclusions |
| How | Mostly automated 270/271 | 271 plus portal or phone for anything high-cost or unusual |
| Who needs it | Every patient, every visit | Procedures, imaging, surgery, therapy, infusions, specialty and out-of-network care |
The benefits checklist
Service type codes
A 270 request asks about benefit categories, not CPT codes. Each category is a service type code (STC). Request the codes that match the visit, and know that code 30 returns only the plan's general benefits.
| STC | Category | STC | Category |
|---|---|---|---|
30 | Health benefit plan coverage (general) | MH | Mental health |
1 | Medical care | UC | Urgent care |
98 | Professional (physician) visit, office | 86 | Emergency services |
47 | Hospital | 62 | MRI / CAT scan |
48 | Hospital, inpatient | 4 | Diagnostic X-ray |
50 | Hospital, outpatient | 5 | Diagnostic lab |
PT | Physical therapy | 33 | Chiropractic |
12 | Durable medical equipment purchase | 42 | Home health care |
45 | Hospice | 88 | Pharmacy |
35 | Dental care | AL | Vision (optometry) |
Authorization vocabulary
- Prior authorization
- The plan's approval before a service, based on medical necessity. Missing it is one of the most common reasons for denial, and in-network providers usually cannot bill the patient.
- Precertification
- Often used for inpatient admissions and surgeries. In practice the terms overlap with prior authorization.
- Notification
- The plan only needs to be told (for example, within 24 hours of an emergency admission). No approval decision.
- Referral
- A PCP's order sending an HMO or POS member to a specialist. A referral is not an authorization; a service can need both.
- Predetermination
- An optional advance review of coverage, common in dental. Not a guarantee of payment.
Faster decisions since January 1, 2026
Under CMS's Interoperability and Prior Authorization rule (CMS-0057-F), Medicare Advantage, Medicaid and CHIP plans must decide urgent requests within 72 hours and standard requests within 7 calendar days, and must give a specific reason for every denial. Payers must have electronic prior authorization APIs live by January 1, 2027. Employer plans are not covered by this rule.
A benefits call, step by step
- 1
Identify yourself and the provider
Practice name, NPI, tax ID, and network status you expect.
- 2
Identify the member
Member ID, name, date of birth, and subscriber details for dependents.
- 3
Describe the service precisely
CPT/HCPCS codes, diagnosis, date, place of service (office, outpatient hospital, ASC) and rendering provider.
- 4
Ask the checklist questions
Coverage, deductible and OOP remaining, copay or coinsurance, limits, authorization, referral, exclusions, carve-outs.
- 5
Ask about other insurance
"Do you show any other coverage or COB information on file for this member?"
- 6
Close and document
Reference number, representative name, date and time. Read back key amounts. Note that quotes of benefits are not a guarantee of payment.
Turning benefits into a patient estimate
With the allowed amount from your contract and the benefits you verified, you can estimate what the patient owes and collect it, or discuss a payment plan, before the service. Chapter 08 has a calculator.
Good faith estimates (uninsured and self-pay)
Under the No Surprises Act, providers must give uninsured or self-pay patients a written good faith estimate. If a service is scheduled at least 3 business days ahead, it is due within 1 business day; if scheduled at least 10 business days ahead, within 3 business days; and within 3 business days of a request. If the final bill is $400 or more above the estimate, the patient can use the federal dispute process.
Insured patients: still pending
The law also calls for an advanced explanation of benefits (AEOB) from health plans for insured patients, built from the provider's estimate. As of 2026, federal rules for the AEOB have not been finalized and enforcement remains deferred. Many states and payers offer their own estimate tools.
Reading a 271 response
Most eligibility checks are HIPAA X12 transactions: the provider sends a 270 inquiry and the payer returns a 271 response. Practice systems usually display it as a screen, but knowing the raw structure helps you read what the screen leaves out.
A 271 is made of segments that end in ~. Each segment starts with an ID (such as EB) and holds elements separated by *. The response is nested: the payer (information source), then the provider (information receiver), then the subscriber, and a dependent level when the patient is not the subscriber. Benefits appear as a series of EB segments.
Sample 271 · Jordan Doe · Gold PPO 1500
Envelope segments (ISA, GS, GE, IEA) are omitted. This is a fictional, simplified response in 005010X279A1 format. Select any line to see what it means.
Codes you will see most
| EB01 | Benefit information |
|---|---|
1 | Active coverage |
6 | Inactive |
A | Coinsurance |
B | Copayment |
C | Deductible |
G | Out of pocket (stop loss) |
F | Limitations |
I | Non-covered |
L | Primary care provider |
R | Other or additional payer |
U | Contact following entity for information |
Y | Spend down |
| EB06 | Time period |
|---|---|
23 | Calendar year |
22 | Service year (plan year) |
27 | Visit |
29 | Remaining |
32 | Lifetime |
| EB12 | Network |
|---|---|
Y | In network |
N | Out of network |
W | Applies to both |
When the payer rejects the request
If the payer cannot answer, the 271 carries an AAA segment with a reject reason instead of benefits. Most rejections are data problems you can fix at the desk.
| AAA code | Meaning | Usual fix |
|---|---|---|
72 | Invalid or missing member ID | Rescan the card; check suffixes and prefixes; try the subscriber's ID for dependents |
73 | Invalid or missing subscriber name | Match the name exactly as on the card; try without middle initial or suffix |
75 | Subscriber not found | Wrong payer, new ID, or coverage never existed; run insurance discovery |
71 | Birth date does not match | Confirm DOB with photo ID; payer records may be wrong and need the member to correct them |
43 | Invalid provider identification | Check the NPI and that your organization is enrolled with the payer |
42 | Unable to respond at this time | Payer system down; retry later or use the portal or phone |
Coordination of benefits
Coordination of benefits (COB) is the set of rules that decides the order in which plans pay when a person has more than one, so that the plans together never pay more than the total allowable expense.
The primary plan pays first as if no other coverage existed. The secondary plan then considers what is left, and a tertiary plan, if any, goes third. Getting the order wrong is not a technicality: the wrong payer denies the claim (often with reason code CO-22), or pays and later takes the money back.
How you find out there is other coverage
From the patient
Ask every visit, not just at the first one. Marriage, a new job, turning 65, divorce or a child aging out all change COB.
From the 271
An EB*R segment with a related entity marked PRP (primary payer) means this plan believes someone else pays first.
From Medicare
HETS returns Medicare Secondary Payer (MSP) records kept by Medicare's Benefits Coordination & Recovery Center. Hospitals must also complete the MSP questionnaire at registration.
From a denial
A claim denied for COB, or pended while the plan sends the member an "other coverage" questionnaire. Encourage patients to answer those letters; claims wait until they do.
Order rules between commercial plans
Most states base their COB rules on the NAIC model regulation. Apply the rules in order and stop at the first one that decides. Self-funded ERISA plans write their own COB language, though most follow the same pattern.
- 1
No COB provision
A plan that has no coordination provision is always primary.
- 2
Non-dependent before dependent
The plan that covers the person as the employee, subscriber or retiree pays before the plan that covers them as a dependent. (Medicare can reverse this for a retiree covered as a dependent on a working spouse's plan.)
- 3
Dependent children
Parents married or living together: the birthday rule. The plan of the parent whose birthday (month and day, not year) falls earlier in the calendar year is primary. Same birthday: the plan that has covered a parent longer pays first.
Divorced or separated: a court decree that makes one parent responsible for health coverage decides. Without one: custodial parent's plan, then the custodial parent's spouse's plan, then the non-custodial parent's plan, then the non-custodial parent's spouse's plan. A decree for joint custody that is silent on insurance falls back to the birthday rule. - 4
Active before retired or laid off
Coverage through current employment pays before retiree or laid-off coverage, when both plans have this rule.
- 5
Active before COBRA or state continuation
The plan covering the person as an active employee or dependent pays before continuation coverage.
- 6
Longer before shorter
The plan that has covered the person longer pays first.
- 7
None of the above
The plans share allowable expenses equally.
Medicare Secondary Payer rules
Federal law decides when Medicare pays second. Providers are expected to determine this before billing Medicare.
| Situation | Pays first | Pays second |
|---|---|---|
| Age 65+, group health plan through own or spouse's current employment, employer has 20 or more employees | Group health plan | Medicare |
| Age 65+, current employment, employer has fewer than 20 employees | Medicare | Group health plan |
| Under 65 with disability, group health plan through own or family member's current employment, employer has 100 or more employees | Group health plan | Medicare |
| Under 65 with disability, employer has fewer than 100 employees | Medicare | Group health plan |
| ESRD, any group health plan (including retiree or COBRA), during the 30-month coordination period | Group health plan | Medicare |
| ESRD, after the 30-month coordination period | Medicare | Group health plan |
| Retiree coverage or COBRA (no ESRD) | Medicare | Retiree plan or COBRA |
| Work-related injury or illness | Workers' compensation | Medicare (for unrelated care, Medicare is primary) |
| Accident covered by no-fault or liability insurance | No-fault or liability insurer | Medicare, which may make conditional payments and recover them later |
| Medicare and Medicaid (dual eligible) | Medicare | Medicaid |
| Medicare and TRICARE For Life | Medicare | TRICARE For Life |
| Medicare and VA benefits | They do not coordinate. The veteran chooses which program covers each service. | |
Government programs at a glance
Medicaid
Payer of last resort. Every other source pays first, including Medicare, commercial plans, TRICARE and auto or liability insurance. The main exception is the Indian Health Service, which pays after Medicaid.
TRICARE
Pays after other health insurance, but before Medicaid, TRICARE supplements and the Indian Health Service.
Medigap
Always secondary to Original Medicare. Medicare forwards claims automatically through crossover in most cases.
Who pays first? Try the COB tool
COB order finder
Pick a scenario, answer the questions, read the result.
Scenario
Simplified for training. State law, plan language and court orders can change the answer; confirm with the payers when in doubt.
How the secondary plan calculates its payment
Standard (traditional) COB
The secondary pays the smaller of what it would have paid as primary or the balance left after the primary. Patients often owe nothing.
Non-duplication / carve-out
The secondary works out its normal benefit and subtracts what the primary paid. If the primary paid as much or more, the secondary pays nothing. Common in self-funded plans.
Medicare as secondary
Medicare pays the lowest of: its normal primary payment, the higher of its fee schedule or the primary's allowed amount minus the primary payment, or the amount the provider must accept minus the primary payment.
Billing the secondary payer
- 1
Bill the primary
Send the 837 to the primary with the secondary plan listed as other insurance.
- 2
Post the primary remittance
From the 835 or EOB, record the allowed amount, payment, and every adjustment by group and reason code (CO, PR, OA).
- 3
Check for automatic crossover
Medicare forwards many claims to Medigap, Medicaid and some employer plans under Coordination of Benefits Agreements. Do not send a duplicate if the crossover worked.
- 4
Send the secondary claim
Electronic secondary claims carry the primary's adjudication in the 837 other-subscriber loops (2320/2330) and line-level adjustments (2430, CAS segments). Paper claims need the primary EOB attached.
- 5
Bill the patient last
Only after every payer has processed. Watch secondary timely filing limits, which often run from the primary's EOB date.
Claim math
Once benefits are verified, the patient's share is arithmetic. Change any input to see how the allowed amount splits between the plan, the patient and the contractual write-off.
Plan designs vary: some apply a copay and then coinsurance, some waive the deductible for certain services, and in-network providers cannot bill patients for contractual adjustments. Use the plan's actual rules.
The end-to-end workflow
Here is how the pieces fit together for a scheduled visit, from the first phone call to the patient's final statement.
- 1
Scheduling and pre-registration Days to weeks before
Collect demographics, all insurance, reason for visit and ordering provider. Ask about injuries and other coverage.
- 2
Eligibility check At scheduling, then 1–3 days before
Run the 270/271. Fix rejections, confirm product and network, and capture any other-payer flags.
- 3
Insurance discovery If self-pay or rejected
Search for unreported coverage, and screen uninsured patients for Medicaid, Marketplace or charity care.
- 4
Coordination of benefits Before the visit
Set primary, secondary and tertiary order. Complete the Medicare MSP questionnaire for hospital services.
- 5
Verification of benefits For procedures and high-cost care
Check coverage, cost sharing, limits and carve-outs for the specific codes and setting.
- 6
Prior authorization and referrals Before the service date
Submit with clinical documentation; track approval number, approved codes, units and date range.
- 7
Estimate and financial conversation Before or at scheduling
Give the patient an estimate (a good faith estimate if self-pay), explain what they will owe, and offer payment options. Use an ABN for Medicare services that may not be covered.
- 8
Check-in Date of service
Scan card and photo ID, confirm nothing changed, re-run eligibility, collect the copay or estimated amount.
- 9
Service and documentation Date of service
Clinical documentation supports medical necessity and must match what was authorized.
- 10
Claim to the primary payer After coding
Submit an 837 with correct subscriber, payer, authorization number and other-insurance information.
- 11
Remittance, then secondary After adjudication
Post the 835 or EOB, then bill the secondary with the primary's payment and adjustments, unless crossover handles it.
- 12
Patient statement and follow-up After all payers
Bill the remaining patient responsibility. Work denials, and feed root causes back to registration.
Measures worth tracking
Eligibility-related denial rate
Denials for terminated coverage, member not found, wrong payer or COB, as a share of claims. The direct measure of front-end quality.
Authorization-related denial rate
Denials for missing, invalid or mismatched authorizations.
Clean claim rate
Claims accepted and paid on first submission without edits or rework.
Point-of-service collections
Patient payments collected at or before the visit, compared with patient responsibility.
Denials and prevention
Remittances explain every adjustment with a group code and a claim adjustment reason code (CARC). These are the ones that point back to eligibility, benefits and COB.
Group codes: CO contractual obligation (provider cannot bill the patient), PR patient responsibility, OA other adjustment, PI payer-initiated reduction.
| Code | Meaning | Usual root cause | Prevention |
|---|---|---|---|
CO-27 | Expenses incurred after coverage terminated | No date-of-service check; retroactive termination | Verify on the date of service; ask about job or plan changes |
CO-26 | Expenses incurred before coverage | New plan not yet effective; old plan billed | Check effective dates, especially in January |
CO-31 | Patient cannot be identified as our insured | Wrong ID, name or DOB; dependent billed under own ID | Scan the card; match registration to the 271 |
CO-109 | Not covered by this payer; send to the correct payer | Medicare Advantage billed to Medicare; wrong Medicaid MCO; carve-out | Confirm product, MCO assignment and carve-outs |
CO-22 | May be covered by another payer per COB | Payer has other coverage on file as primary | Ask about other insurance each visit; update COB with patient and payer |
CO-197 | Precertification, notification or authorization absent | Auth not requested or not linked to the claim | Check auth rules during VOB; track approvals |
CO-15 | Authorization number missing or invalid | Number not on claim, or codes, units or dates outside the approval | Match the claim to the approval exactly; extend or update auths |
CO-242 | Services not provided by network or primary care providers | Out-of-network provider; HMO member saw non-assigned PCP | Check network for the product and the PCP on file |
CO-204 | Service not covered under the patient's current benefit plan | Benefit exclusion | VOB with codes; financial waiver or ABN where allowed |
CO-119 | Benefit maximum for this period reached | Visit or dollar limits used up | Track visits used; recheck accumulators |
CO-29 | Time limit for filing has expired | Delays from wrong payer or COB disputes | Bill the right payer first time; know each payer's limit (Medicare: 12 months from service) |
PR-1 / 2 / 3 | Deductible / coinsurance / copay | Not a denial: patient responsibility | Collect at time of service based on the estimate |
CO-45 | Charge exceeds fee schedule or maximum allowable | Not a denial: contractual adjustment | Write off; do not bill the patient |
Habits that prevent most of these
- Ask "Has anything changed with your insurance?" and "Do you have any other coverage?" at every visit.
- Re-run eligibility on the date of service, not just at scheduling.
- Correct registration to match what the payer returns, character for character.
- Treat every
EB*R, MSP record and COB letter as a task, not a note. - Close the loop: send denial root causes back to the people who register patients.
Rules and regulations
HIPAA
Standard transactions
Requires standard electronic formats: 270/271 eligibility, 276/277 claim status, 278 authorization, 834 enrollment, 835 remittance and 837 claims, plus the NPI. Privacy rules apply when you share member information on calls.
ACA
Affordable Care Act
Dependent coverage to 26, no pre-existing condition exclusions, preventive services without cost sharing in network, annual out-of-pocket limits, Marketplace subsidies and the 3-month APTC grace period. Section 1104 made CAQH CORE operating rules for eligibility transactions mandatory, including real-time response expectations and required cost-sharing data.
NSA
No Surprises Act
In effect since 2022. Limits balance billing for emergency care, out-of-network clinicians at in-network facilities and air ambulances. Requires good faith estimates for uninsured and self-pay patients. The insured-patient AEOB is still awaiting final rules.
ERISA
Employee Retirement Income Security Act
Governs employer plans, and preempts state insurance law for self-funded plans. Sets federal claims and appeals procedures.
MSP
Medicare Secondary Payer statute
Makes Medicare secondary in the employment, ESRD, workers' compensation, no-fault and liability situations in Chapter 07. Providers must identify other payers before billing Medicare, and hospitals use the MSP questionnaire.
TPL
Medicaid third party liability
Makes Medicaid the payer of last resort. States must identify other coverage, and providers must bill it first.
CMS-0057-F
Interoperability and Prior Authorization rule
Since January 1, 2026: 72-hour urgent and 7-day standard prior authorization decisions, specific denial reasons and public metrics for Medicare Advantage, Medicaid and CHIP. By January 1, 2027: FHIR-based Prior Authorization, Patient Access, Provider Access and Payer-to-Payer APIs.
OBBBA
2025 budget law (H.R. 1)
Medicaid: work requirements and six-month renewals for expansion adults, and shorter retroactive coverage, starting January 1, 2027. HSAs: since January 1, 2026, bronze and catastrophic plans count as HSA-eligible, certain direct primary care arrangements no longer block HSA eligibility, and pre-deductible telehealth is permanently allowed.
COBRA
Continuation coverage
Federal continuation rights for employers with 20+ employees: 60-day election window and retroactive reinstatement. State "mini-COBRA" laws cover smaller groups.
State law
Insurance department rules
Prompt-pay deadlines, state surprise-billing laws, COB rules based on the NAIC model, and mandated benefits. These apply to fully insured plans, not self-funded ones.
Key numbers 2026–27
Values you will meet in benefit checks this year and at January renewals. Self-only / family where two amounts are shown.
| Item | 2026 | 2027 |
|---|---|---|
| Original Medicare | ||
| Part A hospital deductible (per benefit period) | $1,736 | Due in Nov |
| Part A coinsurance, days 61–90 | $434 / day | — |
| Part A lifetime reserve days | $868 / day | — |
| Skilled nursing facility, days 21–100 | $217 / day | — |
| Part A premium (fewer than 40 work quarters) | up to $565 / mo | — |
| Part B standard premium | $202.90 / mo | Due in Nov |
| Part B annual deductible | $283 | Due in Nov |
| Part B coinsurance (most services) | 20% | 20% |
| Part D out-of-pocket cap | $2,100 | — |
| ACA plans | ||
| Maximum out-of-pocket limit (in network) | $10,600 / $21,200 | $12,000 / $24,000 |
| HSA-qualified HDHPs | ||
| Minimum deductible | $1,700 / $3,400 | $1,750 / $3,500 |
| Maximum out-of-pocket | $8,500 / $17,000 | $8,700 / $17,400 |
| HSA contribution limit | $4,400 / $8,750 | $4,500 / $9,000 |
| HSA catch-up, age 55+ | $1,000 | $1,000 |
"Due in Nov": CMS usually publishes the next year's Part A and B amounts in November. "—" means not yet published or not tracked here.
Policy status worth knowing
Expired
Enhanced Marketplace subsidies
The enhanced premium tax credits ended December 31, 2025. The House passed a three-year extension on January 8, 2026, but the Senate has not passed it, so 2026 subsidies follow the original ACA formula. Expect more premium lapses, grace periods and coverage changes.
Coming Jan 1, 2027
Medicaid eligibility changes
Six-month renewals and work requirements for expansion adults; retroactive coverage limited to one month (expansion adults) or two months (others) before the application month.
In effect 2026
Wider HSA eligibility
Bronze and catastrophic plans are treated as HSA-qualified HDHPs, so more patients will have high deductibles paired with an HSA.
Pending
Advanced EOB for insured patients
Still at the proposed-rule stage as of 2026; good faith estimates for self-pay patients remain in force.
Glossary
Knowledge check
Eight questions drawn from the chapters above. Pick an answer to see the explanation.
Score: 0 / 8
Sources
- CMS: 2026 Medicare Parts A & B premiums and deductibles
- AARP: Medicare Part D changes for 2026
- Horton Group: ACA cost-sharing limits revised for 2026
- Hylant: ACA cost-sharing limits for 2027
- Thomson Reuters: 2026 HSA and HDHP limits
- IFEBP: 2027 HSA and HDHP limits (Rev. Proc. 2026-24)
- RSM: IRS Notice 2026-5 on bronze, catastrophic and DPC HSA eligibility
- KFF: Expiration of the enhanced premium tax credits
- Taxpayers.net: ACA subsidy legislative status
- HFMA: CMS guidance on six-month Medicaid redeterminations
- Justice in Aging: Medicaid retroactive eligibility changes in 2027
- CMS: Interoperability and Prior Authorization final rule (CMS-0057-F)
- Health Affairs: Unfinished work on No Surprises Act cost estimates
For training and reference. This page summarizes general rules and does not replace payer contracts, plan documents, CMS manuals, state law or legal advice. Example names, IDs, phone numbers and payers are fictional.
Figures checked October 15, 2026.