Announcing a change to second-payer coordination of benefits claims


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This communication is relevant to you if your benefits plan includes extended health care (EHC), drug and/or dental coverage. 

Sun Life is changing our administrative practices concerning second-payer coordination of benefits (COB) claims for eligible services and supplies payable for EHC, drug and dental expenses. Starting in late Q4, 2015, amounts not paid by the primary plan will be adjudicated to the eligible (reasonable and customary) amount of the expense, instead of the submitted amount.

Our objective in making this change is to help manage the future sustainability of benefits plans. Using the reasonable and customary amount to adjudicate COB claims will reduce the impact on second-payer claims for eligible services or supplies when providers charge more than the reasonable and customary limits (where limits exist).

The current contract and booklet wording supports this administrative practice, so no updates are needed.

Industry trend

Placing more emphasis on claim controls to protect against excessive charges is an industry-wide trend, given the cost of providing benefits plans. We understand that other carriers are considering implementing similar changes.

At the same time, this continues to align our practices with Canadian Life and Health Insurance Association (CLHIA) COB guidelines, which help insurers apply fair and consistent processes to adjudicating coordination of benefits claims.

How the COB calculation will change

Today, when we are the second payer, the combined payment from both the primary carrier and Sun Life does not exceed the submitted amount of the claim.

Once the COB change is implemented, the combined payment from both the primary carrier and Sun Life will not exceed the reasonable and customary amount of the expense being claimed. This is how reasonable and customary amounts are established:

  • Medical expenses Determined by Sun Life. (Each carrier determines their reasonable & customary amounts.)
  • Drug expenses – Determined by Sun Life’s drug provider, TELUS Health, through its price file. (Each carrier determines their reasonable and customary amounts.)
  • Dental expenses 100% of the fees listed in the appropriate current provincial dental fee guide, published by each provincial dental association. Where no accepted fee guide exists (as in Alberta), Sun Life establishes an annual reimbursement guide.

We’ve included some examples to show how the COB calculations will work and an FAQ.

Effect on your plan experience

We expect that the overall impact to a plan's experience will be minor, but this change will help support the ongoing sustainability of your program. The amount of claims savings depends on several things, such as:

  • How much providers today are charging above reasonable and customary fees for their services and for the prescription drugs they fill,
  • The extent providers alter their billing practices in the future, and
  • Where your plan members are located and the types of expenses that are being claimed.

What this means to your plan members

First-payer claims are not affected, so most plan members will not see a change. For second-payer claims:

  • The majority of plan members who are affected by this change will experience only a minor effect on their second-payer claims when providers do not bill within reasonable and customary limits. If a health care practitioner, pharmacist or dentist charges more than the reasonable and customary amount, or the cost of an item is more than the reasonable and customary amount, then the plan member may be responsible for the difference in cost.
  • A very small number of plan members will experience a more significant impact, particularly for certain medical expenses (e.g., some equipment), or where the provider is billing considerably above the reasonable and customary rate.
  • Plan members of dental plans in Alberta will see an effect because the Alberta Dental Association and College does not publish a provincial dental association fee guide, so dental fees can vary significantly from Sun Life’s annual reimbursement guide.

Next steps

We will communicate with you again in the fall before implementing the change, and provide a communication to share with your plan members.


Please contact your Client Service Administrator at 1-877-786-7227.