Did you know that when a child is born to parents who both have health insurance, the choice of which plan will cover the child isn’t made by the parents? Surprised? You’re not alone. The National Association of Insurance Commissioners has established a regulation known as the “Birthday Rule,” which dictates that the insurance plan of the parent whose birthday falls earliest in the calendar year will be designated as the primary insurance for the child. Here’s what new parents should be aware of regarding this rule.
The Birthday Rule is commonly recognized in the health insurance industry. It specifies that the health insurance of the parent with the earlier birthday in the year takes precedence, irrespective of the year of birth of the parents. For instance, if your birthday is April 6, and your partner’s is November 12, your insurance will be primary for your child. Unfortunately, there is no option to choose differently.
If this sounds perplexing and frustrating, that’s understandable. Navigating medical insurance can be challenging, and such hidden policies often leave parents feeling overwhelmed. The purpose of the Birthday Rule is to establish a clear method for coordinating benefits.
Yes, a child can indeed be covered under both parents’ insurance plans, but one must be designated as primary and the other as secondary. This arrangement helps ensure that neither the family, hospital, nor medical professionals receive more compensation than the actual cost of medical services. The primary plan addresses the claim first, with the secondary plan covering any remaining eligible expenses.
However, there are exceptions to the Birthday Rule. If both parents share the same birthday, the plan that has been active the longest will be considered primary. In the case of divorce, a court order can override the Birthday Rule, and if parents are separated, the plan of the custodial parent is primary. If the custodial parent has remarried, that new spouse’s insurance becomes secondary.
One of the significant issues with the Birthday Rule is that it assumes both parents’ insurance policies have comparable premiums, deductibles, and networks, which often isn’t the case. For example, consider the experience of Anna and Mark, who faced this very issue when Anna gave birth to their first child. They were unaware of the Birthday Rule. Anna had chosen her plan, which offered better coverage, but Mark’s insurance had a significantly higher deductible and limited network options.
When their daughter, Lily, was born with complications requiring NICU care, the medical bills were astronomical. Initially, Anna’s insurance began to cover the costs but soon halted payments, citing the Birthday Rule. Eventually, after a lengthy struggle, the bills were settled, but the family was left with a considerable amount still owed.
Understanding health insurance can be daunting, especially for new parents who are already dealing with the stress of welcoming a baby. It’s crucial that parents are made aware of policies like the Birthday Rule upfront to avoid unexpected medical bills. It’s a shame that families often discover such policies only after the fact, leading to unnecessary financial strain.
As complicated as Anna and Mark’s story is, many families face similar challenges in a system where health insurance is often perceived as a luxury rather than a basic right. While there have been some advancements due to the Affordable Care Act, there is still much work to be done to ensure that new parents can focus on bonding with their baby rather than worrying about medical expenses.
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If you’re considering starting or expanding your family, you might find it helpful to read some of our other posts, like the one found here.
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In summary, the Birthday Rule can complicate health insurance coverage for children of parents with insurance. It’s essential for new parents to familiarize themselves with this rule and its implications to avoid unexpected financial burdens during an already challenging time.