24. 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 covered loss?
Answer: C
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, the benefits will be coordinated between the two policies. The primary insurer will cover the claim up to its policy limits, and any remaining costs will be addressed by the secondary insurer according to its terms.
A) Each insurer will pay equal amounts of the covered loss.
This option is incorrect because coordination of benefits does not necessarily imply equal sharing of costs. Instead, one insurer is designated as primary, which pays first, and the other as secondary, which pays any remaining eligible expenses.
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 describes a similar payment structure, it inaccurately specifies that the husband's insurer will be the only one paying first. The determination of which insurer is primary can vary based on specific policy rules, and this option does not address the coordination of benefits concept correctly.
C) 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 describes the coordination of benefits process. The primary insurer pays first, up to its limits, and the secondary insurer pays any remaining covered expenses, which is the correct approach in this situation.
D) Only the primary insurer will pay expenses toward the loss under the limits of the plan.
This option is incorrect because it overlooks the role of the secondary insurer. While the primary insurer pays first, the secondary insurer may cover additional costs if they are eligible under its policy, which is not captured in this statement.
Conclusion
The correct answer, C, effectively outlines how coordination of benefits works, specifying both the roles of the primary and secondary insurers in covering a claim. All other options either misrepresent the process or fail to incorporate the necessary details about how benefits are coordinated between both health insurance policies.