When more than one insurance policy covers a claim, the carriers need to work out who's going to be responsible for what. This happens in the health care world, where two spouses may both have family medical coverage, and a child's medical bills are submitted to two different insurance companies. In this scenario, tertiary or supplemental insurance sometimes come into play.
When you are covered by two insurance policies, and submit a claim, one of the carriers must be the primary, and another the secondary. Primary insurance would cover all costs under its policy limits, while the secondary would pick up additional costs, if the secondary policy covers these costs and the primary does not. Tertiary insurance is "third-level" or supplemental insurance that will cover additional claims. In many cases, it's a benefit offered to employees alongside basic individual or family health insurance.
Order of Coverages
Tertiary is a legal term, and the responsibility of a tertiary carrier is set by the law or, in the case of Medicare involvement, by federal regulations. When a senior citizen has Medicare insurance, for example, he may also opt for supplemental insurance, which is always secondary. If he also meets Medicaid guidelines, then that program becomes the tertiary insurance. This would cover any costs not already paid by the primary and secondary coverages.
Tertiary can also mean "third" beneficiary on a life insurance policy. When you buy life insurance, you must designate a beneficiary who will receive the death benefit if you pass away. You can also designate a second (or contingent) and third beneficiary; if your primary and secondary beneficiaries also happen to die before the death benefit can be paid, then the tertiary becomes the primary. Tertiary can also mean a beneficiary who receives a third portion of the death benefit. This only happens if you name more than one individual beneficiary on the policy.
Billing tertiary insurance for a claim can be a complicated procedure. Medical billing offices are supposed to sort out the order of claims to be paid, but insurance companies will often dispute the claims -- especially if there's liability involved (such as in a work injury or car accident). In some cases, the claim of a medical provider against a tertiary carrier will have to go to court, where a judge has to straighten out the claims.
Founder/president of the innovative reference publisher The Archive LLC, Tom Streissguth has been a self-employed business owner, independent bookseller and freelance author in the school/library market. Holding a bachelor's degree from Yale, Streissguth has published more than 100 works of history, biography, current affairs and geography for young readers.