††††† 806 KAR 18:030. Group health insurance coordination of benefits.
††††† RELATES TO: KRS 304.17-042, 304.17A-250(9), 304.18-032, 304.18-085, 304.32-145, 304.38-185, 304.43-085
††††† STATUTORY AUTHORITY: KRS 304.2-110(1), 304.18-085, 304.32-250, 304.38-150
††††† NECESSITY, FUNCTION, AND CONFORMITY: KRS 304.2-110 provides that the executive director may make reasonable administrative regulations necessary for or as an aid to the effectuation of any provision of the Kentucky Insurance Code. KRS 304.32-250 provides that the Executive Director of Insurance may promulgate reasonable administrative regulations he deems necessary for the proper administration of KRS 304.32. KRS 304.38-150 provides that the Executive Director of Insurance may promulgate reasonable administrative regulations which he deems necessary for the proper administration of KRS 304.38. This administrative regulation establishes guidelines for coordination of benefits by group health insurance contracts.
††††† Section 1. Definitions. (1) "Allowable expense" means a health care service or expense including deductibles, coinsurance or copayments, that is covered in full or in part by any of the plans covering the person.
††††† (2) "Benefit reserve" means the savings recorded by a plan for claims paid for a covered person as a secondary plan rather than as a primary plan.
††††† (3) "Claim" means a request that benefits of a plan be provided or paid, and the benefits claimed may be in the form of:
††††† (a) Services including supplies;
††††† (b) Payment for all or a portion of the expenses incurred;
††††† (c) A combination of paragraphs (a) and (b) of this subsection; or
††††† (d) An indemnification.
††††† (4) "Claim determination period" means a period of at least twelve (12) consecutive months, over which allowable expenses shall be compared with total benefits payable in the absence of coordination of benefits, to determine whether overinsurance exists and how much each plan will pay or provide.
††††† (5) "Complying plan" means a plan with benefit determination requirements that comply with the requirements of this administrative regulation.
††††† (6) "Coordination of benefits" means a provision establishing an order in which plans pay their claims, and permitting secondary plans to reduce their benefits so that the combined benefits of all plans do not exceed total allowable expenses.
††††† (7) "Custodial parent" means the parent awarded custody of a child by a court decree, or with whom the child resides more than one-half (1/2) of the calendar year.
††††† (8) "Insurance contract" means a contract issued by an insurer as defined herein.
††††† (9) "Insurer" is defined in KRS 304.17A-005(27).
††††† (10) "Noncomplying plan" means a plan with no benefit determination requirements or whose benefit determination requirements do not comply with the requirements of this administrative regulation.
††††† (11) "Plan" means a form of coverage with which coordination of benefits is allowed and health benefit plans as defined in KRS 304.17A-005(22):
††††† (a) "Plan" shall not include the medical benefits coverage in a group, group-type, and individual motor vehicle "no-fault" and traditional automobile "fault" type contracts;
††††† (b) "Plan" may include Medicare benefits pursuant to 42 USC 1395, or other governmental benefits; and
††††† (c) "Plan" shall not include school accident-type coverages which cover elementary, high school, and college students for accidents only, including athletic injuries, either on a twenty-four (24) hour basis or on a "to-and-from school" basis.
††††† (12) "Primary plan" means a plan whose benefits for a person's health care coverage shall be determined without taking the existence of any other plan into consideration if:
††††† (a) The plan either has no order of benefit determination requirements, or its requirements differ from those permitted by this administrative regulation; or
††††† (b) All plans that cover the person use the order of benefit determination requirements required by this administrative regulation, and under those requirements the plan determines its benefits first.
††††† (13) "Secondary plan" means a plan that is not a primary plan.
††††† Section 2. Requirements for Coordination of Benefits. (1) If a person is covered by two (2) or more plans, the requirements for determining the order of benefit payments are as follows:
††††† (a) The primary plan shall pay or provide its benefits as if the secondary plan or plans did not exist;
††††† (b) A plan that does not contain a coordination of benefits provision that is consistent with this administrative regulation is always primary except that coverage obtained by virtue of membership in a group and designed to supplement a part of a basic package of benefits may provide that the supplementary coverage shall be considered secondary to the basic package of benefits provided by the contract holder; and
††††† (c) A plan may take the benefits of another plan into account only when it is secondary to that other plan.
††††† (2) The first of the following requirements that describes which plan pays its benefits before another plan is the requirement to use:
††††† (a) Nondependent or dependent. The plan that covers the person other than as a dependent is primary and the plan that covers the person as a dependent is secondary unless the person is a Medicare beneficiary, in which case the order of benefits is determined in accordance with 42 USC 1395.
††††† (b) A child, including a newborn subject to KRS 304.17-042 and 304.18-032, covered under more than one (1) plan.
††††† 1. The primary plan is the plan of the parent whose birthday is earlier in the year if:
††††† a. The parents are married;
††††† b. The parents are not separated (whether or not they ever have been married); or
††††† c. A court decree awards joint custody without specifying that one (1) parent has the responsibility to provide health care coverage.
††††† 2. If both parents have the same birthday, the plan that has covered either of the parents longer is primary.
††††† 3. If a court decree states that one (1) parent is responsible for the childís health care expenses or health care coverage and the plan of that parent has actual knowledge of those terms, that plan is primary. If the parent with financial responsibility has no coverage for the childís health care services or expenses, but that parentís spouse does, the spouseís plan is primary.
††††† 4. If the parents are not married or are separated or divorced, and there is no court decree allocating responsibility for the childís health care services or expenses, the order of benefit determination among the plans of the parents and the parentsí spouses (if any) is:
††††† a. The plan of the custodial parent;
††††† b. The plan of the spouse of the custodial parent;
††††† c. The plan of the noncustodial parent; and then
††††† d. The plan of the spouse of the noncustodial parent.
††††† (c) Active or inactive employee. The plan that covers a person as an employee who is neither laid off nor retired, or as that employeeís dependent, is primary.
††††† (d) Continuation coverage. If a person whose coverage is provided under a right of continuation pursuant to federal or state law is also covered under another plan, the plan covering the person as an employee, member, subscriber or retiree, or as that personís dependent, is primary and the continuation coverage is secondary.
††††† (e) Longer or shorter length of coverage. If the preceding requirements do not determine the order of benefits, the plan that covered the person for the longer period of time is primary:
††††† 1. To determine the length of time a person has been covered under a plan, two (2) plans shall be treated as one (1) if the covered person was eligible under the second within twenty-four (24) hours after the first ended;
††††† 2. Changes during a coverage period that do not constitute the start of a new plan include:
††††† a. A change in scope of a planís benefits;
††††† b. A change in the entity that pays, provides or administers the planís benefits; or
††††† c. A change from one (1) type of plan to another.
††††† 3. The personís length of time covered under a plan is measured from the personís first date of coverage under that plan. If that date is not readily available for a group plan, the date the person first became a member of the group shall be used as the date from which to determine the length of time the personís coverage under the present plan has been in force.
††††† (f) If none of the preceding requirements determines the primary plan, the allowable expenses shall be shared equally between the plans.
††††† Section 3. Procedure to be Followed by Secondary Plan. (1) A secondary plan shall reduce its benefits so that the total benefits paid or provided by all plans during a claim determination period are not more than 100 percent of total allowable expenses.
††††† (a) The secondary plan shall calculate its savings by subtracting the amount that it paid as a secondary plan from the amount it would have paid had it been primary and any savings shall be:
††††† 1. Recorded as a benefit reserve for the covered person; and
††††† 2. Used by the secondary plan to pay any allowable expenses, not otherwise paid, that are incurred by the covered person during the claim determination period.
††††† (b) By the end of the claim determination period, the secondary plan shall:
††††† 1. Determine whether a benefit reserve has been recorded for the covered person;
††††† 2. Determine whether there are any unpaid allowable expenses for that claims determination period; and
††††† 3. Pay any unpaid allowable expenses for that claim determination period.
††††† (c) The secondary plan shall use the covered personís recorded benefit reserve, if any, to pay up to 100 percent of total allowable expenses incurred during the claim determination period, at the end of which:
††††† 1. The benefit reserve shall return to zero; and
††††† 2. A new benefit reserve shall be created for each new claim determination period.
††††† (2) The benefits of the secondary plan shall be reduced when the sum of the benefits payable under the secondary plan, in the absence of this coordination of benefits provision, and the benefits that would be payable under the other plans, in the absence of a coordination of benefits provision, whether or not a claim is made, exceeds the allowable expenses in a claim determination period, with a reduction of benefits as follows:
††††† (a) The benefits of the secondary plan shall be reduced so that they and the benefits payable under the other plans do not total more than the allowable expenses; and
††††† (b) Each benefit is reduced in proportion and charged against any applicable benefit limit of the plan.
††††† (3) If a person is covered by more than one secondary plan, the order of benefit determination requirements of this administrative regulation decide the order in which secondary plans benefits are determined in relation to each other. Each secondary plan shall take into consideration the benefits of the primary plan or plans and the benefits of any other plan which, under the requirements of this administrative regulation, has its benefits determined before those of that secondary plan.
††††† Section 4. Notice to Covered Persons. A plan shall, in its explanation of benefits provided to covered persons, include the following language: "If you are covered by more than one (1) health benefit plan, you should file all your claims with each plan."
††††† Section 5. Miscellaneous Provisions. (1) A secondary plan that provides benefits in the form of services may recover the reasonable cash value of the services from the primary plan, to the extent that benefits for the services are covered by the primary plan and have not already been paid or provided by the primary plan.
††††† (2) A plan with order of benefit determination requirements that comply with this administrative regulation may coordinate its benefits with a plan that is "excess" or "always secondary" or that uses order of benefit determination requirements that do not comply with those contained in this administrative regulation on the following basis:
††††† (a) If the complying plan is the primary plan, it shall pay or provide its benefits first;
††††† (b) If the complying plan is the secondary plan, it shall pay or provide its benefits first, but the amount of the benefits payable shall be determined as if the complying plan were the secondary plan. In that situation, the payment shall be the limit of the complying planís liability; and
††††† (c) If the noncomplying plan does not provide the information needed by the complying plan to determine its benefits within a reasonable time after it is requested to do so, the complying plan shall assume that the benefits of the noncomplying plan are identical to its own, and shall pay its benefits accordingly. If, within two (2) years of payment, the complying plan receives information as to the actual benefits of the noncomplying plan, it shall adjust payments accordingly.
††††† (3) If the noncomplying plan reduces its benefits so that the covered person receives less in benefits than he would have received had the complying plan paid or provided its benefits as the secondary plan and the noncomplying plan paid or provided its benefits as the primary plan, and governing state law allows the right of subrogation set forth below, then the complying plan shall advance to or on behalf of the covered person an amount equal to the difference.
††††† (4) The complying plan shall not advance more than the complying plan would have paid had it been the primary plan less any amount it previously paid for the same expense or service, and:
††††† (a) In consideration of the advance, the complying plan shall be subrogated to all rights of the covered person against the noncomplying plan; and
††††† (b) The advance by the complying plan shall also be without prejudice to any claim it may have against a noncomplying plan in the absence of subrogation.
††††† (5) Coordination of benefits differs from subrogation. Provisions for one (1) may be included in health care benefits contracts without compelling the inclusion or exclusion of the other.
††††† (6) If the plans cannot agree on the order of benefits within thirty (30) calendar days after the plans have received all of the information needed to pay the claim, the plans shall immediately pay the claim in equal shares and determine their relative liabilities following payment, except that no plan shall be required to pay more than it would have paid had it been primary.
††††† Section 6. Severability. If any provision of this administrative regulation or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of this administrative regulation and the application of that provision to other persons or circumstances shall not be affected thereby. (13 Ky.R. 104; Am. 509; eff. 9-4-86; 27 Ky.R. 1896; 2782; eff. 4-9-2001; TAm eff. 8-9-2007.)