What does the coordination of benefits provision dictate if Kim incurs $7,000 in expenses under plans A and B?

The coordination of benefits provision is designed to prevent insurance plans from overlapping and paying more than 100% of the incurred expenses when a policyholder is covered by multiple health insurance plans. In Kim's case, when she incurs $7,000 in expenses under both plans A and B, the coordination of benefits determines how the costs will be split between the two insurers.

The correct approach is often that one plan will act as the primary payer, covering the majority of the expenses, while the secondary plan will cover the remaining eligible expenses up to its limits. This helps ensure that while the total amount paid does not exceed the actual expenses incurred, each plan contributes its share based on preset rules.

In this situation, the rationale that Plan A covers up to $5,000 and Plan B covers up to $2,000 effectively utilizes the full benefit of both plans without exceeding the total expenses of $7,000. This division is usually based on the respective coverages and limits each plan provides, ensuring that Kim receives the most benefit from her dual coverage.

By arranging the coverage this way, Kim’s out-of-pocket expenses are minimized while adhering to the coordination of benefits guidelines, ultimately maintaining the integrity of the health insurance system and preventing any potential for overpayment