What is the primary purpose of the Coordination of Benefits Provision in group insurance?

The primary purpose of the Coordination of Benefits Provision in group insurance is to ensure benefits are not duplicated. This provision is essential when an insured individual is covered by more than one health insurance policy. It establishes rules for how claims will be paid to prevent situations where the total benefits received exceed the costs incurred for medical services.

By coordinating benefits between multiple insurance plans, the process seeks to distribute the financial obligation fairly among insurers, allowing each to pay a portion of the claim while ensuring that the insured does not receive more than the maximum allowable coverage. This helps maintain the integrity of the insurance system and prevents excessive payouts that could lead to increased premiums for all policyholders.

While maximizing benefits for the insured may seem advantageous, the focus of Coordination of Benefits is actually to avoid overcompensation. Eliminating out-of-pocket expenses entirely is not a primary goal of this provision since the insured may still have some costs to bear regardless of the coordination. Although simplification of the claims process is a benefit of having a well-structured system, it is secondary to the main aim of preventing duplication of benefits.