12. Both husband and wife have group health insurance through their employers. Each spouse is covered under both policies. Under the coordination of benefits provision, how will the benefits be paid if the wife incurs a $400 covered loss?
Answer: A
The primary insurer will pay as much of the claim as the policy permits, then the secondary insurer will pay the remainder of the claim as its policy permits.
In this scenario, when both spouses have group health insurance, the coordination of benefits provision dictates that the primary insurer pays first, followed by the secondary insurer for any remaining eligible expenses. Therefore, in the case of the wife's $400 covered loss, the benefits will be allocated in this manner.
A) The primary insurer will pay as much of the claim as the policy permits, then the secondary insurer will pay the remainder of the claim as its policy permits.
This option accurately reflects the standard procedure under the coordination of benefits provision. It ensures that the primary insurer covers the claim up to its maximum limits, and then the secondary insurer addresses any remaining balance, which aligns with the rules governing multiple health insurance policies.
B) The husband's insurer will pay as much of the claim as the policy permits, then the wife's insurer will pay the remainder.
While this option correctly describes the process of sequential payment, it incorrectly specifies that the husband's insurer is the primary payer without establishing the order of benefits. The determination of which insurer is primary typically depends on the specific rules set by the insurers or the circumstances surrounding the coverage, which is not universally applicable as suggested.
C) Only the primary insurer will pay expenses toward the loss under the limits of the plan.
This option is incorrect as it overlooks the role of the secondary insurer in the coordination of benefits. In cases where more than one policy covers a loss, the secondary insurer is expected to contribute to any remaining balance after the primary insurer has paid its share.
D) Only the wife's insurer will pay expenses toward the loss.
This option misrepresents the benefits coordination process. If both insurers are involved, the wife's insurer does not solely cover the expenses; rather, both insurers coordinate to ensure that the total benefits paid do not exceed the actual loss while following the primary and secondary payment structure.
Conclusion
Option A is the definitive correct answer as it correctly outlines the process of benefits coordination between two insurers. It highlights the primary and secondary roles of the insurers, ensuring that the claims are handled appropriately according to their respective policies. All other options fail to accurately capture the full process or misidentify which insurer is responsible for payment.