- (a) When it is determined, pursuant to §3.3508 of this title (relating to Rules for Coordination of Benefits and Order of Benefits), 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.
(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 a 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 the 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) When the benefits of a secondary plan are reduced as described in this subsection, each benefit is reduced in proportion. It is then charged against any applicable benefit limit of the plan.
- (2) Paragraph (1) of this subsection does not apply if the plan provides only one benefit, or may be altered to suit the coverage provided.
Source Note:The provisions of this §3.3509 adopted to be effective June 3, 1994, 19 TexReg 3938.