A little-known regulation called the birthday rule plays a predominant role in determining which health insurance plan provides primary coverage and which provides secondary coverage when children are covered by both parents’ insurance policies.
The birthday rule says that the primary coverage comes from the parent’s plan whose birthday (month and day) comes first in the year. The other parent’s plan provides secondary coverage. the year of birth is not taken into account.
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for example, a parent with a birthday in March would provide primary insurance versus the other parent whose birthday is in October, who would provide secondary coverage.
how does the birthday rule work?
When a dependent is covered by two health insurance policies, the birthday rule determines the order in which the insurance companies will pay. this may affect the child’s benefits and out-of-pocket costs for copays and deductibles.
With the birthday rule, the primary insurance provider pays first, operating as if it were the sole insurance payer. the secondary insurer then pays for what the primary insurer didn’t cover, mitigating or even eliminating out-of-pocket costs for certain services.
It is important to remember that the birthday rule only applies to dependents and children covered by both parents’ separate insurance policies. does not apply to a child or children covered by a single insurance plan.
The birthday rule also applies to dental care, whether provided as part of an umbrella policy or through a stand-alone dental plan.
coordination of benefits
The Birthday Rule is part of a set of rules called the Coordination of Benefits (COB) that collectively resolve questions about which health insurance policy provides coverage.
The intent of the birthday rule is to prevent double billing and overpayment of claims while ensuring that the dual covered child receives coordinated and complementary care from the two payers. By working together, the two insurance companies are more likely to provide coordinated care, not duplication.
The first iteration of the Birthday Rule emerged in the 1970s. In 1984, the National Association of Insurance Commissioners (NAIC) developed the current version of the Birthday Rule as part of its Coordination of Benefits model, which establishes a process to determine the primary and secondary payers.
The rule itself is not a law, but most insurance companies follow the birthday rule, and nearly all states have adopted the birthday rule as common insurance practice to encourage its use.
remember that even with double coverage, the benefits and restrictions of the policies remain in force.
The primary insurer may not pay for certain procedures or provide adequate coverage as a result of various complications, leaving the secondary payer to bear the costs. the secondary payer may step in and provide full coverage, partial coverage, or no coverage for various services depending on whether they fall within the coverage requirements of the secondary plan. but in most cases, the secondary payer will cover at least some of the costs.
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Also, each plan has its own copays and deductibles, and typically one plan won’t cover these costs for the other, leaving parents in the dark about each plan’s copays and deductibles.
pros and cons: should I keep dual insurance coverage?
The birthday rule has pros and cons, which influences whether parents will cover a child or children with one or two policies. Under the birthday rule, the two policies are supposed to complement each other, with one serving as the primary payer and the other functioning as a secondary role, covering most, if not all, of the costs not covered by the primary insurer.
Having two health insurance policies costs more in terms of premiums, deductibles, and out-of-pocket costs. But having dual coverage can lead to savings in long-term medical costs if the two insurance companies complement each other and provide comprehensive coverage, mitigating expenses for illnesses, for example, and other types of expensive care.
There are other times when the monthly cost of having dual coverage isn’t worth it. In these cases, parents may want to retain the child’s coverage for the more generous policy while dropping the other, less comprehensive policy.
health insurance coverage for newborns
The birthday rule usually comes into play for newborns, when babies are covered by two separate policies provided by the mother and father.
Care for labor and delivery of the baby will be automatically covered by the mother’s insurance policy. Insurers generally provide automatic coverage for a newborn for the first 30 days, and parents are responsible for adding a newborn to their insurance immediately after the 30-day period. the birth will be a qualifying life event, allowing you to update your coverage.
If there is dual coverage for the newborn, both policies automatically cover the newborn for the first 30 days and the birthday rule determines primary and secondary coverage. however, delivery of the baby and standard newborn services are covered by the mother’s insurance.
The birthday rule is especially important when the newborn experiences medical complications and it becomes necessary to determine primary and secondary payers.
If there are no medical problems for the baby, parents providing dual coverage generally select the plan they want for the newborn at the end of the 30-day coverage period. they typically do not choose to cover the baby with two insurance policies, and as a result, the birthday rule no longer applies.
what can go wrong when the birthday rule decides the main coverage?
When a child is covered by multiple health insurance policies, families could face high medical costs if the underinsured plan is considered the primary policy under the birthday rule.
In these cases, parents may want to drop one plan and keep another, more generous plan, for example, to avoid the birthday rule altogether and provide the best coverage possible.
Parents providing dual coverage should also review plans periodically to ensure that the two policies provide coordinated and complementary care, not duplicate care, and therefore pay appropriately.
Several news stories have highlighted the high out-of-pocket costs that can result when a child’s coverage is automatically determined by the birthday rule rather than selected based on parental preference.
for example, in kansas, the birthday rule designated a parent’s insurance plan as the primary provider for a couple’s young daughter. the plan had a high $12,000 deductible, high coinsurance payments, and a network of providers focused in another state.
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The mother’s more generous plan served as secondary insurer, and the couple initially had to pay a medical bill of $270,951 for the birth of their daughter, who experienced medical complications.
The bill was eventually reduced to $20,000 and then nothing after negotiations with the insurers and the hospital. this underscores the risks of not knowing how the birthday rule may affect coverage.
exceptions to the birthday rule
The birthday rule, like other rules, is subject to exceptions and provisions to resolve difficult situations.
If a child is covered by both parents who share the same birthday, the longest-in-force policy serves as the primary plan. For example, if the mother’s plan has covered the child longer than the father’s plan, then the mother’s plan is the primary policy.
In most divorce settlements, one parent is responsible for providing insurance coverage, and that parent’s policy provides primary coverage, superseding the birthday rule.
divorced with joint custody
If divorced parents have joint custody and a court has not specified which parent should provide insurance for dependent children, the birthday rule takes effect.
custodial parent remarries and child is added to stepparent’s plan
In cases where a custodial parent remarries and a child is added to the new spouse’s insurance, the custodial parent’s insurance is primary.
continuation of state coverage or charges
In a situation where one parent has insurance through an employer or the Affordable Care Act (ACA) Marketplace and the other parent has collects or insurance through the continuation of State coverage, employer-provided insurance policy, or ACA is primary.
young adult covered by parent and spouse
The ACA allows children to remain on their parents’ insurance policy until age 26. If a young adult is covered under both the parent’s plan and their spouse’s plan, the plan that covers the young adult the longest is primary. if coverage under both plans began on the same day, the birthday rule applies.
young adult covered by parents and employer
If a young adult is covered by both the parent’s plan and the employer’s plan, the employer’s plan is primary. the birthday rule does not apply.
will the birthday rule change in 2022?
For some, the birthday rule is seen as an unbiased, random, and ultimately fair way of choosing primary and secondary payers when there is dual coverage for a child. it would be a fair choice if all insurance plans offered the same coverage at the same cost. But insurance policies are not created equal, often varying widely in terms of what they cover and what they cost.
In 2021, a bill was introduced in the House of Representatives that would give parents more control in deciding which plan provides primary coverage.
The bill, known as the Parental Health Care Empowerment Act, would give parents with dual policies 60 days from the date of a baby’s birth to choose which plan is primary and notify the insurer of your choice. if parents don’t make a selection within 60 days, the birthday rule would take effect.
The bill is currently before the House health subcommittee.
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