PURPOSE: This rule restricts the use of coordination of benefits provisions in group health insurance plans to those situations where they may be equitably applied.

1. (1) Applicability. The purpose of this rule is to—

   1. (A) Permit, but not require, plans to include a coordination of benefits (COB) provision;
   2. (B) Establish an order in which plans pay their claims;
   3. (C) Provide the authority for orderly transfer of information needed to pay claims promptly;
   4. (D) Reduce duplication of benefits by permitting a reduction of the benefits paid by a plan where the plan, pursuant to rules established by this rule, does not have to pay its benefits first;
   5. (E) Reduce claims payment delays; and
   6. (F) Make all contracts that contain a COB provision consistent with this rule.

2. (2) Definitions. The following words and terms, when used in this rule, shall have the following meanings unless the context clearly indicates otherwise:

   1. (A) Allowable expenses.

      1. 1. Allowable expense means the necessary, reasonable

and customary item of expense for health care when the item of expense is covered at least in part under any of the plans involved, except where a statute requires a different definition.

1. 2. Notwithstanding this definition, items of expense under

coverages, such as dental care, vision care, prescription drug or hearing-aid programs, may be excluded from the definition of allowable expense. A plan which provides benefits only for any of these items of expense may limit its definition of allowable expenses to like items of expense.

1. 3. When a plan provides benefits in the form of service,

the reasonable cash value of each service will be considered as both an allowable expense and a benefit paid.

1. 4. The difference between the cost of a private hospital

room and the cost of a semi-private hospital room is not considered an allowable expense under this definition unless the patient’s stay in a private hospital room is medically necessary in terms of generally accepted medical practice.

1. 5. When COB is restricted in its use to specific coverage in a

contract (for example, major medical or dental), the definition of allowable expense must include the corresponding expenses or services to which COB applies.

1. 6. When benefits are reduced under a primary plan because

a covered person does not comply with the plan provisions, the amount of this reduction will not be considered an allowable expense. Examples of these provisions are those related to second surgical opinions, precertification of admissions or services and preferred provider arrangements.

1. A. Only benefit reductions based upon provisions similar

in purpose to those described previously and which are contained in the primary plan may be excluded from allowable expenses.

1. B. This provision shall not be used by a secondary

plan to refuse to pay benefits because a health maintenance organization (HMO) member has elected to have health care services provided by a non-HMO provider and the HMO, pursuant to its contract, is not obligated to pay for providing those services. Note: Paragraph (2)(A)6. is not intended to allow a secondary plan to exclude expenses that are applied towards the satisfaction of the deductible, copayments or coinsurance amounts required by the primary plan, except for the benefit reductions expressly described in this paragraph;

1. (B) Claim. A request for benefits of a plan to be provided or paid is a claim. The benefit claimed may be in the form of—

   1. 1. Services (including supplies);
   2. 2. Payment for all or a portion of the expenses incurred;
   3. 3. A combination of paragraphs (2)(B)1. and 2.; or
   4. 4. An indemnification;

2. (C) Claim determination period. This is the period of time, which must not be less than twelve (12) consecutive months over which allowable expenses are compared with total benefits payable in the absence of COB, to determine whether overinsurance exists and how much each plan will pay or provide.

   1. 1. The claim determination period is usually a calendar

year, but a plan may use some other period of time that fits the coverage of the group contract. A person may be covered by a plan during a portion of a claim determination period if that person’s coverage starts or ends during the claim determination period.

1. 2. As each claim is submitted, each plan is to determine

its liability and pay or provide benefits based upon allowable expenses incurred to that point in the claim determination period. That determination is subject to adjustment as later allowable expenses are incurred in the same claim determination period;

1. (D) Coordination of benefits. This is a provision establishing an order in which plans pay their claims;
2. (E) Hospital indemnity benefits. These are benefits not related to expenses incurred. The term does not include reimbursement-type benefits even if they are designed or administered to give the insured the right to elect indemnitytype benefits at the time of claim;

3. (F) Plan. Plan means a form of coverage with which coordination is allowed. The definition of plan in the group contract must state the types of coverage which will be considered in applying the COB provision of that contract. The right to include a type of coverage is limited by the rest of this definition.

   1. 1. The definition of plan shown in the sample COB

provision, attached to this rule as Appendix A, is an example of what may be used. Any definition that satisfies this subsection may be used.

1. 2. This rule uses the term plan. However, a group contract

instead may use program or some other term.

1. 3. Plan may include:

   1. A. Group insurance and group subscriber contracts;
   2. B. Uninsured arrangements of group or group-type

coverage;

1. C. Group or group-type coverage through HMOs and

other prepayment, group practice and individual practice plans;

1. D. Group-type contracts. Group-type contracts are

contracts which are not available to the general public and can be obtained and maintained only because of membership in or connection with a particular organization or group. Grouptype contracts answering this description may be included in the definition of plan, at the option of the insurer or the service provider and the contract client, whether or not uninsured arrangements or individual contract forms are used and regardless of how the group-type coverage is designed (for example, franchise or blanket). Individually underwritten and issued guaranteed renewable policies would not be considered group-type even though purchased through payroll deduction at a premium savings to the insured since the insured would have the right to maintain or renew the policy independently of continued employment with the employer. Note: The purpose and intent of this provision are to identify certain plans of coverage which may utilize other than a group contract but are administered on a basis more characteristic of group insurance. These group-type contracts are distinguished by two (2) factors—1) they are not available to the general public, but may be obtained only through membership in, or connection with, the particular organization or group through which they are marketed (for example, through an employer payroll withholding system) and 2) they can be obtained only through that affiliation (for example, the contracts might provide that they cannot be renewed if the insured leaves the particular employer or organization, in which case they would meet the group-type definition). On the other hand, if these contracts are guaranteed renewable allowing the insured the right to renewal regardless of continued employment or affiliation with the organization, they would not be considered group-type;

1. E. Group or group-type hospital indemnity benefits

which exceed one hundred dollars ($100) per day;

1. F. The medical benefits coverage in group, group-type

and individual automobile no-fault type contracts but, as to traditional automobile fault contracts, only the medical benefits written on a group or group-type basis may be included; and

1. G. Medicare or other governmental benefits, except as

provided in subparagraph (2)(F)4.F. That part of the definition of plan may be limited to the hospital, medical and surgical benefits of the governmental program.

1. 4. Plan shall not include:

   1. A. Individual or family insurance contracts;
   2. B. Individual or family subscriber contracts;
   3. C. Individual or family coverage under other prepayment,

group practice and individual practice plans;

1. D. Group or group-type hospital indemnity benefits of

one hundred dollars ($100) per day or less;

1. E. School accident-type coverages. These contracts cover

grammar, high school and college students for accidents only, including athletic injuries, either on a twenty-four (24)-hour basis or on a to-and-from-school basis; and

1. F. A state plan under Medicaid and shall not include

a law or plan when its benefits are in excess of those of any private insurance plan or other nongovernmental plan;

1. (G) Primary plan. A primary plan is a plan whose benefits for a person’s health care coverage must be determined without taking the existence of any other plan into consideration. A plan is a primary plan if either of the following conditions is true:

   1. 1. The plan either has no order of benefit determination

rules or it has rules which differ from those permitted by this rule. There may be more than one (1) primary plan; or

1. 2. All plans which cover the person, use the order of

benefit determination rules required by this rule and under those rules the plan determines its benefits first;

1. (H) Secondary plan. A secondary plan is a plan which is not a primary plan. If a person is covered by more than one (1) secondary plan, the order of benefit determination provisions of this rule decide the order in which their benefits are determined in relation to each other. The benefits of each secondary plan may take into consideration the benefits of the primary plan(s) and the benefits of any other plan which, under the provisions of this rule, has its benefits determined before those of that secondary plan; and
2. (I) This plan. In a COB provision, this term refers to the part of the group contract providing the health care benefits to which the COB provision applies and which may be reduced because of the benefits of other plans. Any other part of the group contract providing health care benefits is separate from this plan. A group contract may apply one (1) COB provision to certain of its benefits (such as dental benefits), coordinating only with like benefits, and may apply other separate COB provisions to coordinate other benefits.

1. (3) Model COB Contract Provision.

   1. (A) General Appendix A contains a model COB provision for use in group contracts. That use is subject to the provisions of subsections (3)(B) and (C) and to the provisions of section (4).
   2. (B) Flexibility. A group contract’s COB provision does not have to use the words and format shown in Appendix A. Changes may be made to fit the language and style of the rest of the group contract or to reflect the difference among plans which provide services, which pay benefits for expenses incurred and which indemnify. No other substantive changes are allowed.

   3. (C) Prohibited Coordination of Benefit Design.

      1. 1. Contracts meeting the definition of plan as defined in

subsection (2)(F) may not reduce benefits on the basis that—

1. A. Another plan exists;
2. B. A person is or could have been covered under another

plan, except with respect to Part B of Medicare; or

1. C. A person has elected an option under another plan

providing a lower level of benefits than another option which could have been elected.

1. 2. No contract may contain a provision that its benefits

are excess or always secondary to any plan as defined in this regulation, except in accord with the rules permitted by this regulation.

1. (4) Rules for Coordination of Benefits—Order of Benefits.

   1. (A) General. The general order of benefits is as follows:

      1. 1. The primary plan must pay or provide its benefits as if

the secondary plan(s) did not exist. A plan that does not include a coordination of benefits provision may not take the benefits of another plan as defined in subsection (2)(F) into account when it determines its benefits. There is one (1) exception—a contract holder’s coverage that is designed to supplement a part of a basic package of benefits may provide that the supplementary coverage shall be excess to any other parts of the plan provided by the contract holder; and

1. 2. A secondary plan may take the benefits of another plan

into account only when, under these rules, it is secondary to that other plan.

1. (B) Order of Benefit Determination. Use the first of the following rules which applies:

   1. 1. Nondependent/dependent. The benefits of the plan

which covers the person as an employee, member or subscriber (that is, other than as a dependent) are determined before those of the plan which covers the person as a dependent, except that, if the person is also a Medicare beneficiary and as a result of the rule established by Title XVIII of the Social Security Act and implementing regulations, Medicare is—

1. A. Secondary to the plan covering the person as a

dependent; and

1. B. Primary to the plan covering the person as other

than a dependent (for example, a retired employee), then the benefits of the plan covering the person as a dependent are determined before those of the plan covering that person as other than a dependent;

1. 2. Dependent child/parents not separated or divorced. The

rules for the order of benefits for a dependent child when the parents are not separated or divorced are as follows:

1. A. The benefits of the plan of the parent whose birthday

falls earlier in a year are determined before those of the plan of the parent whose birthday falls later in that year;

1. B. If both parents have the same birthday, the benefits

of the plan which covered the parent longer are determined before those of the plan which covered the other parent for a shorter period of time;

1. C. The word birthday refers only to the month and day in

a calendar year, not the year in which the person was born; and

1. D. If the other plan does not have the rule described in

subparagraphs (4)(B)2.A.–C. and if, as a result, the plans do not agree on the order of benefits, the rule in the other plan will determine the order of benefits;

1. 3. Dependent child/separated or divorced parents. If two (2)

or more plans cover a person as a dependent child of divorced or separated parents, benefits for the child are determined in this order:

1. A. First, the plan of the parent with custody of the child;
2. B. Then, the plan of the spouse of the parent with the

custody of the child; and

1. C. Finally, the plan of the parent not having custody of

the child;

1. D. If the specific terms of a court decree state that one

1. (1) of the parents is responsible for the health care expenses of the child and the entity obligated to pay or provide the benefits of the plan of that parent has actual knowledge of those terms, the benefits of that plan are determined first. The plan of the other parent or spouse of the other parent shall be the secondary plan(s). This subparagraph does not apply with respect to any claim determination period or plan year during which any benefits are actually paid or provided before the entity has that actual knowledge; or

   1. E. If the specific terms of the court decree state that the

parents shall share joint custody, without stating that one (1) of the parents is responsible for the health care expenses of the child, the plans covering the child shall follow the order of benefit determination rules outlined in paragraph (4)(B)2., dependent child/parents not separated or divorced;

1. 4. Active/inactive employee. The benefits of a plan which

covers a person as an employee who is neither laid off nor retired (or as that employee’s dependent) are determined before those of a plan which covers that person as a laid off or retired employee (or as that employee’s dependent). If the other plan does not have this rule and if, as a result, the plans do not agree on the order of benefits, this rule is ignored. Note: This paragraph does not supersede paragraph (4)(B)1. Coverage provided an individual as a retired worker and as a dependent of that individual’s spouse as an active worker will be determined under paragraph (4)(B)1. This rule covers the situation where one (1) individual is covered under one (1) policy as an active worker and under another policy as a retired worker. It would also apply to an individual covered as a dependent under both of those policies;

1. 5. Continuation coverage.

   1. A. If a person whose coverage is provided under a right

of continuation pursuant to federal or state law also is covered under another plan, the following shall be the order of benefit determination:

1. (I) First, the benefits of a plan covering the person

as an employee, member or subscriber (or as that person’s dependent); and

1. (II) Second, the benefits under the continuation

coverage.

1. B. If the other plan does not have the rule described

previously and if, as a result, the plans do not agree on the order of benefits, this rule is ignored. Note: The Consolidated Omnibus Budget Reconciliation Act of 1987 (COBRA) originally provided that coverage under a new group health plan caused the COBRA coverage to end. An amendment passed as part of H.R. 3299 (1989) allows the COBRA coverage to continue if the other group plan contains any preexisting condition limitation. In this instance, two (2) policies will cover an individual and the previous rule will be used to determine which of them assumes the primary position; and

1. 6. Longer/shorter length of coverage. If none of these

rules determines the order of benefits, the benefits of the plan which covered an employee, member or subscriber longer are determined before those of the plan which covered that person for the shorter term.

1. A. To determine the length of time a person has been

covered under a plan, two (2) plans shall be treated as one (1) if the claimant was eligible under the second within twenty-four (24) hours after the first ended.

1. B. The start of a new plan does not include:

   1. (I) A change in the amount or scope of a plan’s

benefits;

1. (II) A change in the entity which pays, provides or

administers the plan’s benefits; or

1. (III) A change from one (1) type of plan to another

(such as, from a single employer plan to that of a multiple employer plan).

1. C. The claimant’s length of time covered under a plan is

measured from the claimant’s first date of coverage under that plan. If that date is not readily available, the date the claimant first became a member of the group shall be used as the date from which to determine the length of time the claimant’s coverage under the present plan has been in force.

1. (5) Procedure to be Followed by Secondary Plan—Total Allowable Expenses.

   1. (A) When it is determined pursuant to section (4) that a plan is a secondary plan, it may reduce its benefits so that the total benefits paid or provided by all plans during a claim determination period are not more than total allowable expenses. The amount by which the secondary plan’s benefits have been reduced shall be used by the secondary plan to pay allowable expenses, not otherwise paid, which were incurred during the claim determination period by the person for whom the claim is made. As each claim is submitted, the secondary plan determines its obligation to pay for allowable expenses based on all claims which were submitted up to that point in time during the claim determination period.

   2. (B) The benefits of the secondary plan will be reduced when the sum of the benefits that would be payable for the allowable expenses under the secondary plan, in the absence of this COB provision, and the benefits that would be payable for the allowable expenses under the other plans, in the absence of provisions with a purpose like that of this COB provision, whether or not claim is made exceeds those allowable expenses in a claim determination period. In that case, the benefits of the secondary plan will be reduced so that they and the benefits payable under the other plans do not total more than those allowable expenses.

      1. 1. When the benefits of this plan are reduced as described

previously, each benefit is reduced in proportion. It is then charged against any applicable benefit limit of this plan.

1. 2. Paragraph (5)(B)1. may be omitted if the plan provides

only one (1) benefit, or may be altered to suit the coverage provided.

1. (6) Miscellaneous Provisions.

   1. (A) Reasonable Cash Values of Services. A secondary plan which provides benefits in the form of services may recover the reasonable cash value of providing the services from the primary plan, to the extent that benefits for the services are covered by the primary plan and have not already been paid or provided by the primary plan. Nothing in this provision shall be interpreted to require a plan to reimburse a covered person in cash for the value of the services provided by a plan which provides benefits in the form of services.

   2. (B) Excess and Other Nonconforming Provisions.

      1. 1. Some plans have order of benefit determination

provisions not consistent with this rule which declare that the plan’s coverage is excess to all others or always secondary. This occurs because certain plans may not be subject to insurance regulation or because some group contracts have not been conformed yet with this regulation.

1. 2. A plan with order of benefit determination rules which

comply with this rule (complying plan) may coordinate its benefits with a plan which is excess or always secondary or which uses order of benefit determination provisions which are inconsistent with those contained in this rule (noncomplying plan) on the following basis:

1. A. If the complying plan is the primary plan, it shall pay

or provide its benefits on a primary basis;

1. B. If the complying plan is the secondary plan, it shall

pay or provide its benefits first, nevertheless, but the amount of the benefits payable shall be determined as if the complying plan were the secondary plan. In this situation, the payment shall be the limit of the complying plan’s liability; and

1. C. If the noncomplying plan does not provide the

information needed by the complying plan to determine its benefits within a reasonable time after it is requested to do so, the complying plan shall assume that the benefits of the noncomplying plan are identical to its own, and shall pay its benefits accordingly. However, the complying plan must adjust any payments it makes based on this assumption whenever information becomes available as to the actual benefits of the noncomplying plan.

1. 3. If the noncomplying plan reduces its benefits so that

the employee, subscriber or member receives less in benefits than s/he would have received had the complying plan paid or provided its benefits as the secondary plan and the noncomplying plan paid or provided its benefits as the primary plan, then the complying plan shall advance to or on behalf of the employee, subscriber or member an amount equal to that difference. However, in no event shall the complying plan advance more than the complying plan would have paid had it been the primary plan less any amount it previously paid. In consideration of this advance, the complying plan shall be subrogated to all rights of the employee, subscriber or member against the noncomplying plan. This advance by the complying plan also shall be without prejudice to any claim it may have against the noncomplying plan in the absence of that subrogation.

1. (C) Allowable Expense. A term, such as usual and customary, usual and prevailing or reasonable and customary, may be substituted for the term necessary, reasonable and customary. Terms, such as medical care or dental care, may be substituted for health care to describe the coverages to which the COB provisions apply.

2. (D) Facility of Payment and Recovery.

   1. 1. Whenever payments which should have been made

under a plan have been made under any other plans, the insurer or service plan shall have the right, exercisable alone and in its sole discretion, to pay over to any organizations making the other payments any amounts it shall determine to be warranted in order to satisfy the intent of this rule and amounts so paid shall be deemed to be benefits paid under that plan and to the extent of these payments, the insurer or service plan shall be fully discharged from liability under its plan.

1. 2. Whenever payments have been made by the insurer with

respect to allowable expenses in a total amount at any time, in excess of the maximum amount of payment necessary at that time to satisfy the intent of this rule, the insurer or service plan shall have the right to recover these payments, to the extent of the excess, from among one (1) or more of the following, as the insurer or service plan shall determine: any persons to, or for, or with respect to whom the payments were made; any other insurers, service plans; or any other organizations.

1. 3. Subrogation will not be allowed in any plan as

distinguished from the rights to recovery.

1. (7) Effective Date, Existing Contracts.

   1. (A) This subsection is applicable to every group contract which provides health care benefits and which is issued on or after the effective date of this rule (July 1, 1972).

   2. (B) A group contract which provides health care benefits, is in force at the time of promulgation of these rules and which contains a COB provision not fully in compliance with these rules shall be brought into compliance with this rule by the later of—

      1. 1. The next anniversary date or renewal date of the group

contract; or

1. 2. The expiration of any applicable collectively bargained

contract pursuant to which it was written. Appendix A Model COB Provisions

Coordination of the Group Contracts Benefits With Other Benefits

1. I. APPLICABILITY

   1. A. This coordination of benefits (COB) provision applies to this plan when an employee or the employee’s covered dependent has health care coverage under more than one (1) plan. Plan and this plan are defined here.

   2. B. If this COB provision applies, the order of benefit determination rules should be looked at first. Those rules determine whether the benefits of this plan are determined before or after those of another plan. The benefits of this plan—

      1. (1) Shall not be reduced when, under the order of benefit

determination rules, this plan determines its benefits before another plan; but

1. (2) May be reduced when, under the order of benefits

determination rules, another plan determines its benefits first. This reduction is described in Section IV. Effect on the Benefits of This Plan—

1. II. DEFINITIONS

   1. A. Plan is any of these which provides benefits or services for, or because of, medical or dental care or treatment:

      1. (1) Group insurance or group-type coverage, whether

insured or uninsured. This includes prepayment, group practice or individual practice coverage. It also includes coverage other than school accident-type coverage.

1. (2) Coverage under a governmental plan, or coverage

required or provided by law. This does not include a state plan under Medicaid (Title XIX, Grants to States for Medical Assistance Programs, of the United States Social Security Act). Each contract or other arrangement for coverage under (1) or (2) is a separate plan. Also, if an arrangement has two (2) parts and COB rules apply only to one (1) of the two (2), each of the parts is a separate plan.

1. B. This plan is the part of the group contract that provides benefits for health care expenses.
2. C. Primary plan/secondary plan. The order of benefit determination rules state whether this plan is a primary plan or secondary plan as to another plan covering the person. When this plan is a primary plan, its benefits are determined before those of the other plan and without considering the other plan’s benefits. When this plan is a secondary plan, its benefits are determined after those of the other plan and may be reduced because of the other plan’s benefits. When there are more than two (2) plans covering the person, this plan may be a primary plan as to one (1) or more other plans and may be a secondary plan as to a different plan(s).
3. D. Allowable expense means a necessary, reasonable and customary item of expense for health care, when the item of expense is covered at least in part by one (1) or more plans covering the person for whom the claim is made. The difference between the cost of a private hospital room and the cost of a semi-private hospital room is not considered an allowable expense under this definition unless the patient’s stay in a private hospital room is medically necessary either in terms of generally accepted medical practice or as specifically defined in the plan. When a plan provides benefits in the form of services, the reasonable cash value of each service rendered will be considered both an allowable expense and a benefit paid. When benefits are reduced under a primary plan because a covered person does not comply with the plan provisions, the amount of that reduction will not be considered an allowable expense. Examples of these provisions are those related to second surgical opinions, precertification of admissions or services, and preferred provider arrangements.
4. E. Claim determination period means a calendar year. However, it does not include any part of a year during which a person has no coverage under this plan or any part of a year before the date this COB provision or similar provision takes effect.

1. III. ORDER OF BENEFIT DETERMINATION RULES

   1. A. General. When there is a basis for a claim under this plan and another plan. This plan is a secondary plan which has its benefits determined after those of the other plan, unless—

      1. (1) The other plan has rules coordinating its benefits with

those of this plan; and

1. (2) Both those rules and this plan’s rules, in subsection

III.B., require that this plan’s benefits be determined before those of the other plan.

1. B. Rules. This plan determines its order of benefits using the first of the following rules which applies:

   1. (1) Nondependent/dependent. The benefits of the plan

which covers the person as an employee, member or subscriber (that is, other than as a dependent) are determined before those of the plan which covers the person as a dependent; except that—if the person is also a Medicare beneficiary, and as a result of the rule established by Title XVIII of the Social Security Act and implementing regulations, Medicare is—

1. (a) Secondary to the plan covering the person as a

dependent; and

1. (b) Primary to the plan covering the person as other

than a dependent (for example, a retired employee), then the benefits of the plan covering the person as a dependent are determined before those of the plan covering that person as other than a dependent.

1. (2) Dependent child/parents not separated or divorced.

Except as stated in paragraph III.B.(3), when this plan and another plan cover the same child as a dependent of different persons, called parents—

1. (a) The benefits of the plan of the parent whose birthday

falls earlier in a year are determined before those of the plan of the parent whose birthday falls later in that year; but

1. (b) If both parents have the same birthday, the benefits

of the plan which covered one (1) parent longer are determined before those of the plans which covered the other parent for a shorter period of time. However, if the other plan does not have the rule described previously in III.B.(2)(a) or (b) and if, as a result, the plans do not agree on the order of benefits, the rule in the other plan will determine the order of benefits.

1. (3) Dependent child/separated or divorced. If two (2) or

more plans cover a person as a dependent child of divorced or separated parents, benefits for the child are determined in this order:

1. (a) First, the plan of the parent with custody of the child;
2. (b) Then, the plan of the spouse of the parent with the

custody of the child; and

1. (c) Finally, the plan of the parent not having custody

of the child. However, if the specific terms of a court decree state that one (1) of the parents is responsible for the health care expense of the child and the entity obligated to pay or provide the benefits of the plan of that parent or spouse of the other parent has actual knowledge of those terms, the benefits of that plan are determined first. The plan of the other parent shall be the secondary plan. This paragraph does not apply with respect to any claim determination period or plan year during which any benefits are actually paid or provided before the entity has that actual knowledge.

1. (4) Joint custody. If the specific terms of a court decree state

that the parents shall share joint custody, without stating that one (1) of the parents is responsible for the health care expenses of the child, the plans covering the child shall follow the order of benefit determination rules outlined in paragraph III.B.(2).

1. (5) Active/inactive employee. The benefits of a plan which

covers a person as an employee who is neither laid off nor retired are determined before those of a plan which covers that person as a laid off or retired employee. The same would hold true if a person is a dependent of a person covered as a retiree and an employee. If the other plan does not have this rule and if, as a result, the plans do not agree on the order of benefits, this rule (5) is ignored.

1. (6) Continuation coverage. If a person whose coverage is

provided under a right of continuation pursuant to federal or state law also is covered under another plan, the following shall be the order of benefit determination:

1. (a) First, the benefits of a plan covering the person

as an employee, member or subscriber (or as that person’s dependent); and

1. (b) Second, the benefits under the continuation coverage.

If the other plan does not have the rule described here and if, as a result, the plans do not agree on the order of benefits, this rule is ignored.

1. (7) Longer/shorter length of coverage. If none of the

previous rules determines the order of benefits, the benefits of the plan which covered an employee, member or subscriber longer are determined before those of the plan which covered that person for the shorter term.

1. IV. EFFECT ON THE BENEFITS OF THIS PLAN

   1. A. When This Section Applies. This section IV. applies when, in accordance with section III., Order of Benefit Determination Rules, this plan is a secondary plan as to one (1) or more other plans. In that event the benefits of this plan may be reduced under this section. Other plan(s) are referred to as the other plans in IV.B. immediately following.

   2. B. Reduction in this plan’s benefits. The benefits of this plan will be reduced when the sum of:

      1. (1) The benefits that would be payable for the allowable

expense under this plan in the absence of this COB provision; and

1. (2) The benefits that would be payable for the allowable

expenses under the other plans, in the absence of provisions with a purpose like that of this COB provision, whether or not claim is made, exceeds those allowable expenses in a claim determination period. In that case, the benefits of this plan will be reduced so that they and the benefits payable under the other plans do not total more than those allowable expenses. When the benefits of this plan are reduced as described previously, each benefit is reduced in proportion. It is then charged against any applicable benefit limit of this plan.

1. V. RIGHT TO RECEIVE AND RELEASE NEEDED INFORMATION

Certain facts are needed to apply these COB rules. (Insurer) has the right to decide which facts it needs. It may get needed facts from or give them to any other organization or person. (Insurer) need not tell, or get the consent of, any person to do this. Each person claiming benefits under this plan must give (insurer) any facts it needs to pay the claim.

1. VI. FACILITY OF PAYMENT A payment made under another plan may include an amount which should have been paid under This Plan. If it does, (insurer) may pay that amount to the organization which made the payment. That amount will then be treated as though it were a benefit paid under this plan. (Insurer) will not have to pay that amount again. The term, payment made includes providing benefits in the form of services, in which case payment made means reasonable cash value of the benefits provided in the form of services.
2. VII. RIGHT OF RECOVERY

If the amount of the payments made by (insurer) is more than it should have paid under this COB provision, it may recover the excess from one (1) or more of—

1. A. The person it has paid or for whom it has paid;
2. B. Insurance companies; or
3. C. Other organizations. The amount of the payments made includes the reasonable cash value of any benefits provided in the form services.

1. VIII. Subrogation will not be allowed in any plan as distinguished from the rights to recovery.

AUTHORITY: sections 354.120, 374.045 and 376.405, RSMo 1986.* This rule was previously filed as 4 CSR 190-14.050. Original rule filed June 15, 1972, effective July 1, 1972. Amended: Filed Dec. 20, 1974, effective Dec. 30, 1974. Amended: Filed Jan. 13, 1982, effective April 15, 1982. Emergency amendment filed May 12, 1982, effective May 24, 1982, expired Sept. 10, 1982. Amended: Filed May 12, 1982, effective Oct. 11, 1982. Amended: Filed July 3, 1985, effective Jan. 1, 1986. Amended: Filed Dec. 1, 1989, effective May 1, 1990. Amended: Filed April 4, 1991, effective Oct. 31, 1991. *Original authority: 354.120, RSMo 1973, amended 1983; 374.045, RSMo 1967; and 376.405, RSMo 1959, amended 1984.