What is the primary purpose of the Coordination of Benefits provision in group accident and health plans?

The primary purpose of the Coordination of Benefits (COB) provision in group accident and health plans is to prevent the overpayment of claims when a person is covered by more than one insurance policy. When individuals have multiple insurance plans that could pay for the same medical expenses, the COB provision establishes an order of payment. This ensures that all insurers coordinate their benefits, so the total reimbursement does not exceed the actual expenses incurred. By doing so, each insurer pays its share (according to the predetermined rules of coordination), which protects against the risk of a beneficiary receiving more than what is necessary to cover their costs.

The focus of COB is to maintain fairness among insurers and prevent them from overpaying, which could lead to increased premiums and cost inefficiencies across the insurance system. This aspect of the COB provision is crucial for managing the financial risks associated with multiple policies while ensuring that insured individuals receive appropriate coverage for their health needs.