Insurance Options When The Birthday Rule Changes

The birthday rule is a widely-accepted insurance claims practice that determines which parent's insurance is primary and which is secondary for a child who is covered by both parents' plans. It is not a law, but most insurance companies follow it. The rule states that the parent whose birthday comes first in the calendar year provides the primary coverage, and the other parent's insurance is secondary. This rule helps prevent double billing and overpayment of claims, and ensures that the child receives coordinated care from both insurers.

Understand the birthday rule and how it works

The birthday rule is a method used by many insurance companies to determine which parent's insurance plan is primary or secondary for a child covered by both parents' plans. It is not a law but a widely-accepted insurance claims practice endorsed by many states. It falls under coordination of benefits (COB) rules, which resolve coverage order when individuals have multiple insurance plans.

The birthday rule applies only to dependent children and doesn't apply to adults or children covered under a single insurance plan. According to the rule, the parent whose birthday comes first in a calendar year has the primary coverage for the child, and the other parent's plan provides secondary coverage. The birth year is not considered, only the month and day. For example, if one parent's birthday is in April and the other's is in October, the parent with the April birthday will be responsible for primary insurance.

The birthday rule helps insurance companies coordinate benefits to make sure that neither the insured person nor the doctor is paid more than 100% of a medical claim's actual cost. The primary insurance plan pays first, acting as if it is the sole insurer of the dependent child. The secondary insurance company then pays towards the balance of the bill that the primary insurer did not pay, reducing or sometimes eliminating out-of-pocket costs for covered services.

The birthday rule also applies to dental care, whether provided as part of an overall policy or through a standalone dental plan.

There are exceptions to the birthday rule:

• If both parents share the same birthday, the parent who has been covered by their plan longer provides primary coverage for the children.
• In the case of divorce or separation, the plan of the parent with custody generally provides primary coverage. This order of payment can be altered by a court-issued decree or agreement, but the parents must notify the insurance companies.
• If one parent has insurance through an employer and the other has coverage through a former employer (e.g. COBRA), the plan belonging to the currently employed parent would be primary for the children.

Know the exceptions to the birthday rule

The birthday rule is subject to some exceptions and provisions to resolve complex situations. Here are some scenarios where the birthday rule may not apply:

• Same Birthdays: If both parents share the same birthday, the plan that has covered a parent longer will be the primary plan.
• Court Order: A court order about children's health coverage after a divorce overrides the birthday rule. In this case, the custodial parent's plan is primary, regardless of birthdays.
• Divorce or Separation: In cases of divorce or separation, the plan of the parent with custody pays first. The new spouse's plan of the parent with custody pays second, and the plan of the parent without custody pays last.
• Active Employees: If one parent is employed and has health insurance through their current employer, while the other parent has coverage through a former employer, the plan of the currently employed parent is primary.
• Group Health and Individual Health Plans: If divorced parents have different types of health plans, the group health plan usually pays first, regardless of the birthday rule.

Learn about primary and secondary insurance rules

The birthday rule is a method used by insurance companies to determine which insurance is primary and which is secondary for a dependent child covered by both parents' insurance plans. It is not a law but a widely accepted insurance claims practice endorsed by many states.

The birthday rule is part of a set of rules called the coordination of benefits (COB) which collectively resolves questions about which health insurance policy provides coverage. The primary insurance policy is the policy that claims will be billed to first. The primary insurance pays first on any claims, and the secondary insurance comes into play only if the primary insurance policy is unable to cover the entire claim. The secondary insurance may cover part or all of the remaining cost.

The birthday rule states that the parent whose birthday comes first in a calendar year has the primary coverage for the child. The other parent's health plan then provides secondary coverage. The year of birth is not taken into consideration, only the month and day. For example, if one parent has a birthday in April and the other in September, the parent with a birthday in April will be responsible for primary insurance.

The birthday rule applies only to dependent children and doesn't apply to adults. It also applies to dental care, whether that care is provided as part of an overall policy or through a standalone dental plan.

There are exceptions to the birthday rule:

• If both parents have the same birthday, the primary plan will be the one that has been in effect longer.
• If the parents are divorced with joint custody and a court has not specified which parent is responsible for providing health coverage, the birthday rule would be used to determine which plan is primary.
• If the custodial parent remarries, their new spouse's coverage becomes secondary, with the non-custodial parent's acting as a third line of coverage.
• If one parent has COBRA or state continuation coverage and the other has active employee coverage, the COBRA or state continuation plan will be secondary.
• If a young adult is covered by both a parent and a spouse, the plan that has been covering them for longer will be primary. But if the young adult is covered by their employer, that coverage is primary and their parent/spouse's coverage is secondary.

Primary and secondary insurance rules

When you have two forms of health insurance coverage, your primary insurance pays the first portion of the claim up to your coverage limits. Your secondary insurance may pick up some or all of the remaining costs. However, you may still be responsible for some cost-sharing, such as the deductible, copay and coinsurance fees.

The primary and secondary insurance companies make sure they aren't paying more than 100% of the overall bill through a process known as "coordination of benefits". This helps to make sure each company pays its own part of the claim without overlap.

Weigh the pros and cons of dual insurance coverage

Weighing the pros and cons of dual insurance coverage is an important consideration when the birthday rule changes your insurance. Here are some key points to keep in mind:

Pros of Dual Insurance Coverage:

• Lower out-of-pocket costs: Having two insurance plans can help reduce the amount you have to pay out of your own pocket for medical expenses, especially if one plan has better coverage than the other.
• Reduce coverage gaps: With two insurance plans, you don't have to worry about gaps in coverage if one of your policies lapses or doesn't cover a specific service.
• Potential for more coverage and benefits: If your two plans are complementary, you may get access to more comprehensive coverage and a wider range of benefits.
• No law against it: It is perfectly legal to have dual insurance coverage, and in some cases, it can provide added financial protection.

Cons of Dual Insurance Coverage:

• Higher costs: You will be responsible for paying two sets of premiums, deductibles, and other out-of-pocket expenses, which can increase your overall expenses.
• Complexity and challenges: Navigating multiple insurance policies can be complex, and you may encounter challenges such as double billing, coordination of benefits, and understanding different rules and reimbursement processes.
• Potential for coverage overlap: If your two insurance plans are too similar, there may be overlap in their coverage, and you may not get many additional benefits from having both.
• Complications with billing: Healthcare providers may be reluctant to bill multiple insurance companies, and coordinating payment between the primary and secondary insurers can be complicated.

When deciding whether to maintain dual insurance coverage, it is essential to carefully consider your specific situation, including your healthcare needs, the cost of premiums and deductibles, and the benefits offered by each plan. In some cases, it may be more advantageous to choose a single, more comprehensive plan that meets your needs without the added complexity of dual coverage.

Take steps to avoid the birthday rule

The birthday rule is a widely-accepted insurance claims practice that is endorsed by many states. It is not a law. The birthday rule determines which insurance company will pay first for children listed as dependents on both parents' insurance policies. The parent whose birthday comes first in the calendar year is designated as the primary plan, and the other parent's health plan then provides secondary coverage.

• Compare the health plans and see whether it would make sense to drop one plan and add the child to the other parent's health insurance.
• If you are expecting a new baby, it is important to understand how the coordination of benefits will work. Talk to both insurance plans to see how the child's potential medical expenses will be handled.
• If you have a clear preference for which policy would provide better coverage, you might prefer to insure the child on just that policy—especially if the other parent's policy would end up being primary under the birthday rule.
• If you are an expectant parent with multiple insurance options, review your policies and contact your insurance companies to discuss your preferences. This can help ensure the best coverage possible and avoid any unforeseen costs and lapses in care and coverage for the newborn.
• If you are a young adult covered under a parent's plan and a spouse's plan, the plan that has been covering you for longer will typically be primary.

Frequently asked questions