What does "coordination of benefits" refer to?

Coordination of benefits refers specifically to the process used to determine the order in which multiple health insurance plans will pay claims when an individual is covered by more than one policy. This is crucial in ensuring that claims are processed efficiently and that the total payments do not exceed the actual cost of the services rendered.

For example, if someone has coverage through an employer's health plan and also through a spouse's plan, coordination of benefits helps clarify which insurer pays first—the primary payer—and how the secondary payer will contribute to the remaining balance. This system prevents overlapping payments and ensures equitable distribution of benefits, providing a smooth experience for individuals who have dual coverage.

The other options touch upon important concepts within the insurance realm but do not accurately describe coordination of benefits. Determining eligibility for coverage deals with whether an individual qualifies for certain health insurance plans. Enhancing customer service focuses on improving client interactions and satisfaction. Evaluating insurance plan profitability pertains to financial assessments of the insurance provider's operations rather than the mechanics of insurance claim payments.