18. Which of the following statements is correct about the Coordination of Benefits provision?
Answer: B
The Coordination of Benefits provision prevents an insured covered by two health plans from making a profit on a covered loss.
This provision is designed to ensure that when an individual is covered by multiple health insurance plans, the total reimbursement received does not exceed the actual expenses incurred for the covered loss.
A) It prohibits an insurer from selling a health policy to an applicant who already has similar coverage.
This statement is incorrect as the Coordination of Benefits provision does not restrict insurers from selling policies to applicants with existing coverage. Instead, it focuses on how benefits from multiple policies will be coordinated to avoid overpayment for claims.
B) It prevents an insured covered by two health plans from making a profit on a covered loss.
This statement is correct as the Coordination of Benefits provision ensures that the combined payments from multiple health plans do not exceed the actual costs incurred by the insured for a covered loss, thus preventing profit from occurring.
C) It allows an insured to change insurers without losing benefits.
This statement is incorrect because while individuals can change insurers, the Coordination of Benefits provision does not specifically address the preservation of benefits during such transitions. Benefits may vary based on the new policy and its terms.
D) It permits an insurer to defer paying a claim for a work-related injury until Workers' Compensation Benefits have expired.
This statement is also incorrect. The Coordination of Benefits provision does not allow an insurer to defer claims payment based on the status of Workers' Compensation Benefits; rather, it coordinates benefits among different insurers.
Conclusion
The correct answer is B because the Coordination of Benefits provision specifically aims to prevent insured individuals from receiving more in benefits than the actual cost of their loss when covered by multiple health plans. Options A, C, and D fail to accurately represent the intent and function of the provision, focusing instead on unrelated aspects of insurance coverage.