What Is The Birthday Rule? Here's How It Affects Your Child's Health Insurance

When you signed up for health care coverage, you probably looked at some of the more important parts of the plan, like the premiums you’d have to pay, your prescription drug coverage, and if your favorite OB/GYN would be in your network. Thankfully, your partner also has their own plan, and neither one of you might have given your insurance much thought after that — until kids came along and suddenly you started receiving massive medical bills. That’s why it’s important to know what the birthday rule is when it comes to insurance.

Not too many people know about the birthday rule, which is why couples can get hit with a big bill that they naturally assumed would be covered by their insurance. Thing is, while having coverage for both you and your partner is great, it gets messy when it comes to kids. “It's a good idea to talk with both parents' human resources department before your baby is born,” Louise Norris, a health insurance expert and co-owner of a health insurance brokerage in Colorado tells Romper in an email. “The more you know beforehand, the less likely you are to face unexpected billing scenarios after your little one arrives.”

So let’s do a deep dive into what exactly the birthday rule is (sadly, it doesn’t involve cake or presents).

What Is The Birthday Rule?

The birthday rule is a health insurance policy that insurers have implemented as a means to coordinate benefits for children who are listed as dependents on both parents’ health plans, Insure.com reported. According to the birthday rule, whichever parent’s birthday falls first in the calendar year is the one who will be named as the primary insurance plan. Says Norris: “The birthday rule is just a way of making sure that there's a fair, uniform method for determining which plan is secondary and which plan is primary when a child is covered under both parents' health plans.”

For example, if your birthday is June 14, and your partner’s is October 12, your health plan would the primary one, since your birthday comes first in the calendar year. Under the birthday rule, it doesn’t matter which of you is actually older; it goes by the calendar date, not the year.

Who Created The Birthday Rule?

The birthday rule was first created by the National Association of Insurance Commissioners (NAIC), so that dependents could receive coverage under more than one health plan. The point: the birthday rule ensures that a single medical claim doesn’t get paid by multiple insurance companies, Insurance.com reported. Having the birthday rule in place helps decide which insurance policy will be the primary coverage for the child, and subsequently, which plan will provide secondary coverage. This applies for births as well as adoptions.

How Does The Birthday Rule Work?

Let’s say that your baby has to go to the neonatal intensive care unit (a big bill if ever there were one). If you and your partner have separate insurance plans and have your child listed as a dependent on both of them, then the health care coverage of the primary plan will cover medical costs first. Then, if there is still an unpaid bill, the secondary health plan will pay up to 100% of the remaining amount.

“During the first 30 days, a new baby is automatically covered as an extension of the parent's coverage — so that goes for both parents if they're on separate plans,” explains Norris, who admits that this can sometimes create confusion, as was seen by a case when a Kansas couple (both of whom had separate insurance plans through their jobs) wound up with $270,000 in medical bills after their baby was in the NICU, NPR reported. “But once the parents officially add the baby to one plan or the other, it would no longer be an issue, as long as they pick just one parent's plan.” If you keep your child covered on both insurance plans, the birthday rule might continue to pose a problem.

Is The Birthday Rule A Law?

The birthday rule isn’t a federal or state law. Rather, it’s a “common claims practice,” that helps insurance companies determine who pays what medical bills first and second, Insurance.com reported. “The birthday rule is part of an NAIC model rule, and it's widely used,” says Norris. “But states and/or insurers can have different rules.” Many insurance companies follow it, though, which is why you should read your health care plan very carefully to fully understand your benefits and how it might impact coverage in the future.

What Are The Pros And Cons Of The Birthday Rule?

On the surface, the birthday rule might seem like a great idea. After all, it ensures that your child potentially has complete coverage in the case of a medical event. But let’s say that your partner’s plan offers amazing benefits — but they’re born later in the year than you. That would mean that your insurance would be the primary one, even if it offers less coverage or has a much higher deductible. And that can be pretty painful, especially once medical bills start rolling in.

Why Does The Birthday Rule Exist At All?

Although the birthday rule might seem like it makes things unnecessarily messy, it is actually mean to help prevent overpayment, Insurance.com reported. Think about it: if your baby requires hospitalization after birth, which insurance plan would pay for it? Even if you listed your insurance as the primary one, the bill might accidentally get sent to the secondary insurance (i.e. your partner’s), and inadvertently get paid again. And insurance companies definitely don’t want to pay a provider twice.

How Can You Avoid The Birthday Rule When It Comes To Insurance?

There are some ways around the birthday rule. You should take a comprehensive look at your insurance to see what benefits it offers, and compare it with your partner’s to see which one offers a better deal. If yours makes more fiscal sense, you can always add your partner to your insurance, thereby eliminating the second plan. “You'll want to ask about how coordination of benefits will work during the baby's first month, and how much it would cost to add the baby to each parent's plan,” advises Norris. “You’ll need to know how bills would be covered going forward if the parents choose to cover the child under both plans, and what it would cost to cover the whole family under one plan.” You might also want to look into other insurance plans to see what other options are available, HealthCare.gov reported.

Having both primary and secondary health care coverage can be helpful because it will lower your out-of-pocket expenses that might not be covered by the primary plan. But it’s important to know all the details (and specifically how the birthday rule can affect your coverage). That way, you can focus what matters most — your child’s health and well-being.