Your health plan’s “birthday rule” doesn’t mean that it will throw a party for you each year. Rather, the birthday rule is an informal procedure that the health insurance industry has widely adopted for the coordination of benefits when children are listed as dependents on two parents’ group health plans.
Under the birthday rule, the health plan of the parent whose birthday comes first in the calendar year is designated as the primary plan, according to the National Association of Insurance Commissioners. It doesn’t matter which parent is older. The year of birth isn’t a factor. Thus, if your birthday is July 15, 1985, and your spouse’s is Sept. 17, 1983, your health plan would be considered primary because your birthday comes first in the calendar year.
Children — and adults — can be covered under more than one health plan. When you’re covered under multiple health insurance plans, the plans will have to coordinate you and your children’s benefits. This is one of the reasons a health plan wants to know if you or your spouse has other coverage; it’s not just being curious.
The plans need to coordinate benefits to make sure that neither you nor your doctor is reimbursed for more than 100% of a medical claim’s actual cost. They don’t want you pocketing their money.
To prevent those kinds of payment problems, when children are covered under each parent’s group health plan, one plan is designated as “primary” and the other “secondary.”
- The plan that is primary pays the claims first.
- The secondary plan pays any remaining costs not covered by the primary plan — but only if the medical care is a “covered benefit” under the secondary plan.
A secondary plan won’t reimburse you for services it doesn’t cover. That includes the provider. If the doctor isn’t part of the secondary plan’s netowrk, the plan may not cover their portion. That’s why it’s vital to make sure you go to providers in both plans’ networks.
It’s not always wise to keep both a primary and secondary plan.
For instance, let’s say you have the earlier birthday. Your plan would be considered primary and your spouse’s would be secondary. However, your health plan is much more expensive and doesn’t offer the same level of benefits as your spouse’s. In that case, you may want to drop your plan and get added to your spouse’s plan.
The same can be true if you’re adding a newborn to your policy. In this instance, you’ll want to compare the health plans and see whether it would make sense to drop your plan and add you and your newborn to your spouse’s health insurance.
If you were to do that before the child is born, you’ll have only one plan (your spouse’s). Before the child is born, it’s wise to compare plans and see whether it’s wise to keep two plans or go with the secondary plan only.
Exceptions to the rule
There are exceptions to the birthday rule. And, some in some cases, this gets a bit complicated.
- Same birthdays – If both parents happen to have the same birthday, the plan that has covered a parent longer pays first.
- Court Order – The Employee Retirement Income Security Act of 1974 (ERISA) designates that the birthday rule can be applied to determine which plan is the primary health plan for the children of working parents, according to the child support guidelines from the Center for Policy Research. While the parent whose birthday comes first is still the primary insurance plan, the birthday rule doesn’t apply to children whose parents have divorced or are members of a blended family. A court order about children’s health coverage after a divorce supersedes the birthday rule. If children live with a custodial parent and step parent, the custodial parent provides the primary insurance plan, regardless of whether the step parent’s birthday comes first.
- Divorce or separation – When two or more plans cover your children as dependents when you’re divorced or separated, the plan of the parent who has custody pays first. The plan of the new spouse of the parent with custody pays second. And finally, the plan of the parent who doesn’t have custody pays last.
- Active employees – Your plan is primary if you’re employed and have health insurance through your employer and your spouse has coverage through a former employer (such as COBRA), and your children are listed as dependents on both plans.
- None of the above – When none of these rules determines the issue, the plan of the parent who has been covered longer is designated as primary.
- Group health and individual health plans – The rules are also different if you and your ex-spouse have different types of health plans. If you have a group health plan and your former spouse has an individual plan, the group plan pays first, regardless of the birthday rule.
Word of warning
Remember, the “birthday rule” and its exceptions aren’t insurance laws. Rather, they’re common claims practice — and not all plans follow these customs.
You should read your policy or membership agreement to see what procedure your health insurer has in place. If you’re still uncertain, contact your plan’s customer service department. And make sure you know the payment procedure before you or your children visit the doctor or you may find yourself personally responsible for some unexpected medical bills.