South Carolina Life and Health Practice Exam

Which of the following would NOT be considered a benefit under the Coordination of Benefits provision?

1. Reducing the payout to limit fraud

2. Alleviating double coverage claims

3. Increasing overall benefits for claimants

4. Minimizing loss to insurance companies

The correct answer is: Increasing overall benefits for claimants

The Coordination of Benefits (COB) provision is designed to determine the order of payment when an individual is covered by multiple health insurance policies, ensuring that the total benefits do not exceed the actual costs of the healthcare services provided. One of the core purposes of COB is to alleviate situations where an individual might receive more benefits than the amount of their actual expenses, thus preventing overpayment and potential fraud. When considering the choices provided, the option that states "Increasing overall benefits for claimants" is not aligned with the purpose of COB. Instead of enhancing the total benefits received by an insured individual, the goal of COB is to coordinate the payments among multiple insurers to ensure that coverage does not exceed incurred costs. This means that if a claimant has multiple insurance coverages, the COB will help in establishing which insurer pays what amount, thereby avoiding any potential windfall profit for the claimant from healthcare claims. The COB provision primarily aims at avoiding double coverage claims, reducing the risk of fraud through minimized overpayments from insurers, and limiting losses borne by insurance companies, all of which ensure that claims are handled fairly and responsibly without unnecessary inflation of benefits received.