57. 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 the scenario described, the coordination of benefits provision dictates that the primary insurer pays first up to its policy limits, followed by the secondary insurer covering any remaining eligible expenses. This ensures that both policies work together to provide maximum coverage for the loss incurred by the wife.
A) Each insurer will pay equal amounts of the covered loss.
This option is incorrect because the coordination of benefits does not entail equal distribution of payments between insurers. Instead, one policy is designated as primary, which pays first, while the secondary policy pays the remaining amount, if applicable.
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 suggests a sequential payment structure, it inaccurately implies that the husband's insurer is always the primary payer. The determination of which insurer is primary depends on several factors, such as the policy provisions and the individual situation.
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 reflects the coordination of benefits process. The primary insurer covers the claim up to its limits, and any remaining eligible expenses can then be paid by the secondary insurer, ensuring comprehensive coverage of the loss.
D) Only the primary insurer will pay expenses toward the loss under the limits of the plan.
This statement is misleading as it suggests that no secondary payment occurs, which is not the case under the coordination of benefits provision. The secondary insurer is intended to cover any remaining eligible expenses after the primary insurer has fulfilled its obligation.
Conclusion
The correct answer, C, clearly outlines the insurance payment process under the coordination of benefits, where the primary insurer covers initial expenses and the secondary insurer covers any remaining costs. The other options fail to accurately represent this process, either by mischaracterizing the roles of the insurers or by omitting the secondary payment responsibilities.