The birthday rule sets which health insurance plan offers main coverage and which has secondary coverage when children are covered by more than one parent's insurance policy.
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The birthday rule says the main or primary coverage comes from the parent whose birthday comes earlier in the year. The other parent’s plan provides secondary coverage. The year a parent was born is not taken into consideration.
For example, a parent with a March birthday would have primary coverage if the other parent has an October birthday.
How does the birthday rule work?
When a child is covered by two parents' health insurance policies, the birthday rule decides which insurance company will pay first. This can affect your child's benefits and how much you pay for costs like copayments and deductibles.
With the birthday rule, the primary insurance plan pays first. Then the secondary insurance company may help pay for some of the services that the primary insurance did not cover. This can potentially reduce or eliminate your bill by increasing the number of covered services you have access to.
It’s important to remember that the birthday rule only applies to children covered by both parents’ separate insurance policies. It does not apply to a child or children covered under a single insurance plan.
The birthday rule also applies to dental insurance. It doesn't matter if that care is part of a health insurance policy or if it comes from a stand-alone dental plan.
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Coordination of benefits
The birthday rule is part of a set of rules called coordination of benefits (COB). COB helps insurance companies decide which health policy pays for which service when a person is covered by more than one plan. The birthday rule helps insurance companies work together so they don't pay twice for the same service. It also makes sure children with dual coverage get the most from their insurance plans. By working together, the two insurance companies are more likely to give coordinated, not duplicated, care.
The birthday rule is not a law, but it's a policy most insurance companies follow — and nearly every state encourages its use.
Remember that even with dual coverage, the policies' benefits and restrictions still apply. That means the primary insurance company may not pay for certain services or have full coverage for certain complications, leaving it to the secondary payer to pick up the costs.
The secondary payer may step in with full coverage, partial coverage or no coverage, depending on what's written into the secondary plan's covered services. But in most cases, the secondary payer will pay for at least some of the costs.
Each plan has its own copays and deductibles, and regular health plans won't usually cover these costs for another plan, so you'll still have to pay copayments and deductibles for each plan.
However, supplemental insurance plans that pay out directly to you can be used to pay for out-of-pocket costs, such as your copay, coinsurance and deductibles.
Pros and cons: Should you keep dual insurance coverage?
In most cases, it's cheaper for parents to not have dual coverage for their children.
Carrying two health insurance policies costs more in terms of monthly rates, deductibles and other out-of-pocket costs. In some cases, dual coverage may save you money in the long run if the two insurance companies cover enough different services.
However, there are other times when the monthly cost of having dual coverage is not worth it. In these cases, parents may want to keep the policy with better coverage while dropping the less comprehensive plan.
Health insurance coverage for newborns
The birthday rule usually comes into play for newborns, when babies are covered by both of their parents' policies.
The baby’s delivery and childbirth costs are automatically covered by the mother’s insurance policy. Insurance companies usually offer automatic coverage for a newborn for the first 30 days, and the parents are responsible for adding a newborn to their insurance immediately after the 30-day period.
The birth will be a qualifying life event, which allows you to change your coverage.
If the newborn has dual coverage, both policies automatically cover the newborn for the first 30 days, and the birthday rule determines primary and secondary coverage. However, the infant’s delivery and standard newborn services are covered by the mother’s insurance.
The birthday rule is especially important in cases where the newborn experiences medical complications, and it becomes necessary to decide which insurance pays first.
Expecting parents with more than one insurance option should review their plans and contact their insurance companies to ask about policy details. This will help make sure that your baby gets the best coverage possible.
What can go wrong when the birthday rule decides primary coverage?
When a child is covered by multiple health insurance policies, you could face high medical costs if the birthday rule decides that the plan with poor coverage is primary. In this case, you may want to drop the child from the less generous plan.
Parents with dual coverage should also review the plans regularly to make sure the two policies don't overlap too closely. Remember, health plans that mostly cover the same services rarely lead to saving money.
Exceptions to the birthday rule
Exceptions to the birthday rule exist to help with certain tricky situations, such as if both parents share a birthday.
Does the birthday rule apply?
If a child is covered by the insurance of two parents who share the same birthday, the policy that started first 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.
Divorced with joint custody
The birthday rule decides which plan is primary when divorced parents have joint custody, unless the judge decides otherwise.
Parent with custody remarries and child is added to step parent’s plan
In cases where a parent with custody remarries and a child is added to the new spouse’s insurance, the biological parent with custody's insurance is primary.
COBRA or state continuation coverage
If one parent has insurance through an employer or the Affordable Care Act (ACA) marketplace and the other parent has COBRA, the employer or ACA policy is primary.
Young adult covered by parent and spouse
The Affordable Care Act allows children to stay on a parent’s insurance policy until the age of 26. If a young adult is covered by both a parent’s plan and a spouse’s plan, the plan covering the young adult for the longest is primary.
If coverage for both plans started on the same day, the birthday rule applies.
Young adult covered by parent and employer
If a young adult is covered by both a parent’s plan and an employer group plan, the employer plan is primary. The birthday rule does not apply.
Frequently asked questions
How does the birthday rule determine primary and secondary coverage?
The birthday rule determines primary and secondary insurance coverage when children are covered under both parents’ insurance policies. The birthday rule says primary coverage comes from the plan of the parent whose birthday comes first in the year.
Can a child be covered by both parents’ insurance?
A child can be covered by both parents’ health insurance. When dual coverage exists, the birthday rule usually determines which insurance acts as the primary plan and which is secondary.
Whose health insurance does a baby go on?
Newborn babies are automatically put on their mother's health insurance for their first 30 days. After that period, the birthday rule will decide which insurance policy is primary and which is secondary for babies covered by both parents’ policies.
What is coordination of benefits for insurance?
Coordination of benefits establishes a process for deciding which insurance plan pays first and which pays second. The model was developed by the National Association of Insurance Commissioners with input from the insurance industry.