The type of plan you described is called "non duplication of benefits". It's a very hard concept for many to grasp and very hard to explain to elderly patients. I used to be a phone rep for the GE plan which is just such a plan. They calculate what they would have paid if primary, subtract what the actual primary paid, and only pay anything over that amount. Like SLittles said, they process the claim according to THEIR policy guidelines. Verizon retirees have the same type of plan. It is very common in United Health Care.