How Coordination of Benefits Works in Canada

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Many employees are leaving money on the table when it comes to their benefits.

If a spouse or partner also has coverage, coordination of benefits allows claims to be shared between two plans. This often reduces out-of-pocket costs. But without a clear understanding of how it works, employees may run into claim issues, pharmacy confusion or unnecessary back-and-forth with HR. 

What Does Coordination of Benefits Mean?

Coordination of benefits is the process insurers use when someone is covered under more than one group benefits plan. This most often happens when both partners have employer sponsored benefits.

Instead of both plans paying the full claim, insurers follow a standard order to determine which plan pays first and which plan pays second. The goal is to reimburse as much of the expense as possible without exceeding the total cost.

These coordination rules are established by the Canadian Life and Health Insurance Association and are used across most Canadian group benefits plans.

How Coordination of Benefits Works

When a person has two benefits plans, one plan becomes the primary payer and the other becomes the secondary payer.

The primary plan processes the claim first and reimburses according to the plan rules. Any remaining balance can then be submitted to the second plan.

For example, an employee submits a dental claim for $200. Their plan covers 80 per cent of the cost, so the first plan reimburses $160. The remaining $40 can then be submitted to their spouse’s benefits plan. If that plan also covers the expense, it may reimburse the remaining amount. 

In many cases, this process allows employees to recover most – or even all – of their eligible expenses.

Why Claims Are Sometimes Only Partially Reimbursed

Employees are sometimes surprised when a claim is only partially reimbursed. In most cases, it comes down to a few common issues:

• The remaining balance wasn’t submitted to the second plan
• The service isn’t covered under the second plan
• The second plan has already reached its annual limit

Another common issue is submitting the claim to the wrong plan first. When claims are submitted out of order, they may be declined until they’re processed correctly.

Which Benefits Plan Pays First?

In most cases, the order is straightforward. Employees submit claims to their own benefits plan first. If there’s a remaining balance, it can then be submitted to their spouse or partner’s plan.

For dependent children, the order is based on the parents’ birthdays. The parent whose birthday comes earlier in the calendar year submits the claim first. The second parent’s plan then processes the remaining balance. 

These rules are consistent across most Canadian group benefits plans, which helps keep the process predictable.

Helping Employees Get More Value from Their Benefits

Here are some ways you can help employees use coordination of benefits more effectively:

• Include a simple explanation during onboarding
• Share reminders during open enrollment or renewal periods
• Encourage employees to keep spouse and dependent information up-to-date
• Provide a quick guide or FAQ on how to submit claims across two plans

You can also remind employees that flexible benefits options such as a Health Care Spending Account (HCSA) may help cover remaining balances when plan limits are reached. Our guide to HCSA vs Wellness Spending Accounts (WSA) explains how these accounts work.

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Group benefits are one of the most valuable parts of an employee’s total compensation, but employees don’t always know how to use them fully. We can help your team better understand their benefits and get the most value from their coverage. Contact our team at Prime Benefits Group today.