CARD T201
Balance Billing
A provider charging a patient the difference between the billed charge and the plan’s allowed amount. Contracts and law may prohibit it.
How it works
Balance billing is collection of the difference between a provider’s charge and the plan’s allowed amount, apart from normal cost sharing. Network contracts often prohibit it. Federal No Surprises Act protections generally limit surprise bills for covered emergency services, certain nonemergency care at participating facilities, and covered air ambulance services. Federal protections generally do not cover ground ambulances, though state law may. Exceptions and notice-and-consent rules do not permit every provider to waive every protection. [10] [12]
Where balance billing is permitted, a $150 charge against a $100 allowed amount can create a $50 balance bill in addition to applicable cost sharing.
A prohibited balance bill is not made valid simply by calling it coinsurance.
CARD T202
Explanation of Benefits (EOB)
A statement showing how a claim was processed and what amounts may be owed. It is not itself a bill.
How it works
An EOB explains claim processing: billed charges, allowed amounts, plan payment, adjustments, and estimated member responsibility. It is not a demand for payment. Compare it with the provider’s bill and flag mismatches, denied services, or duplicate charges. An appeal deadline may appear on a denial notice or EOB. [10]
An EOB says the member owes $40, but the provider bills $140. The discrepancy should be checked rather than paying the EOB as if it were another bill.
An EOB and a provider bill can describe the same claim; they are not automatically two separate debts.
CARD T203
Coordination of Benefits
Rules determining how multiple health plans share payment responsibility. They establish which plan pays first and how another may contribute.
How it works
Coordination of benefits sets payment order when more than one health plan covers a person. Under common commercial rules, coverage as an employee pays before coverage as a dependent. For a child covered by both parents, a birthday rule often uses the earlier month and day—not the older parent—to establish priority when its conditions apply. Court orders, custody, and special program rules can change the order. Medicare coordination uses its own rules. [10] [13]
For a child under a standard birthday rule, a parent born March 20 precedes a parent born July 2, regardless of birth year.
The birthday rule is not a universal rule for every person with two plans.
CARD T204
Primary Payer
The plan or program that pays first under coordination rules. Being primary does not mean it pays every expense.
How it works
The primary payer processes the claim first under applicable coordination rules and pays according to its own benefits. Primary status does not require payment of every billed dollar. The primary EOB helps the secondary plan evaluate its responsibility. Medicare can be primary or secondary depending on factors such as current employment, employer size, disability, or ESRD coordination rules. [10] [13]
A primary plan allows $1,000 and pays $800 under its benefits. A secondary plan then considers the remaining eligible amount under its own rules.
Primary means first in order, not necessarily full payment.
CARD T205
Secondary Payer
A plan or program considering eligible costs after the primary payer. Its payment remains subject to its own rules.
How it works
The secondary payer evaluates a claim after the primary payer. Its responsibility depends on its own coverage and coordination formula; it does not necessarily pay all remaining charges or every primary deductible. Coordinated payments generally are designed to avoid paying more than eligible expenses. A service excluded by the secondary plan can remain unpaid. [10] [13]
The primary EOB leaves $200 of member responsibility. The secondary plan may pay some, all, or none depending on its rules.
Two plans do not guarantee zero out-of-pocket cost.
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Practice questions
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T201 · Balance Billing
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T202 · Explanation of Benefits (EOB)
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T203 · Coordination of Benefits
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T204 · Primary Payer
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T205 · Secondary Payer
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Sources & further reading
Original explanations and practice scenarios informed by the following regulatory, legal, and product resources. State examples are not presented as nationwide deadlines or requirements.