What Is the Birthday Rule in Health Insurance?
Understand how the health insurance Birthday Rule simplifies coordination of benefits when dependents are covered by multiple plans.
Many households, particularly those with children, find themselves in situations where a dependent is eligible for benefits from multiple health insurance policies. This overlap in coverage necessitates a clear process for determining which plan pays first. This process is known as coordination of benefits, and it helps ensure that claims are processed efficiently without overpayment from insurers.
Understanding the Birthday Rule
The birthday rule is a widely adopted guideline used by health insurance companies to determine the order of payment when a dependent child is covered by two different health insurance plans. Its primary purpose is to establish which plan acts as the primary payer and which acts as the secondary payer in a coordination of benefits scenario. While not a federal law, the birthday rule is a standard industry practice endorsed by many states and the National Association of Insurance Commissioners (NAIC).
Applying the Rule to Your Coverage
When a child is covered by two parents’ health insurance policies, the plan of the parent whose birthday falls earlier in the calendar year is designated as the primary payer. The determination is based solely on the month and day of birth, not the year of birth, meaning the older parent’s plan is not automatically primary. For example, if one parent’s birthday is in March and the other’s is in July, the parent with the March birthday’s plan would be primary for the child’s claims.
After the primary plan processes the claim according to its benefits, any remaining eligible costs may then be submitted to the secondary plan. In less common instances where both parents share the exact same birthday, the tie-breaker typically defaults to the plan that has covered a parent for a longer period of time. Specific plan rules may also dictate other tie-breaking procedures in such rare scenarios.
Special Situations and Deviations
While the birthday rule provides a common framework, specific situations can alter its application. In cases of divorced or separated parents, a court order or divorce decree can explicitly designate which parent is responsible for providing the child’s primary health insurance. Such a legal mandate overrides the standard birthday rule, making the court-ordered plan primary regardless of the parents’ birthdates. If no court order specifies health coverage, the birthday rule typically remains in effect to determine the primary payer.
Other scenarios can also influence the coordination of benefits. For instance, if a child is covered by a parent’s plan and also by a stepparent’s plan, the custodial parent’s plan is usually primary. Additionally, if one parent has an active employment-based plan and the other has coverage through a former employer, such as COBRA, the active employment plan is generally considered primary. These exceptions ensure that specific legal or employment circumstances are prioritized in determining coverage order.
Practical Steps for Families
Families navigating multiple health insurance coverages should take proactive steps to ensure smooth claims processing and minimize unexpected costs. It is important to confirm with both insurance providers which plan is designated as primary and which is secondary for dependent children. Understanding the specific benefits, deductibles, co-payments, and out-of-pocket maximums for both plans can provide a clear financial picture. Keeping detailed records of insurance policies, including policy numbers, group numbers, and contact information for both insurers, is also beneficial.
When seeking healthcare services, clearly communicate both primary and secondary insurance information to healthcare providers. This allows the provider to submit claims correctly, first to the primary insurer and then to the secondary insurer for any remaining balances. Reviewing the Explanation of Benefits (EOB) from the primary insurer after a claim is processed is crucial to understand what was covered and what amount, if any, remains for the secondary insurer to consider. Following these steps can help families effectively manage their healthcare benefits and financial responsibilities.