Which of the following best describes the primary purpose of the coordination of benefits provision in group health plans?

• A. Increase premiums
• B. Avoid overpayment of claims
• C. Accelerate claim settlement
• D. Limit coverage

Answer: (B)

Coordination of benefits aims to prevent paying more than the actual cost when a person has more than one health plan. When multiple plans could cover the same service, this provision establishes how the plans work together so the total payments don’t exceed the allowed expenses. It typically assigns a primary plan to pay first and a secondary plan to cover remaining eligible costs, up to its own limits. This avoids overpayment and over-insurance, rather than increasing premiums, speeding up settlements, or limiting coverage. For example, if two plans could pay for a service, the primary plan covers its portion first, and the secondary plan may cover any remaining deductible or coinsurance, but never pay twice for the same expense.