The ‘Birthday Rule’ For Health Insurance And What New Parents Need To Know

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Did you know that if a child is born to parents that both carry health insurance, the parents don’t get to choose which insurance the child will be covered by? You have probably read that a few times and are currently thinking “What?!” But it’s true. The National Association of Insurance Commissioners set a regulation that requires a child to take the insurance plan of the parent whose birthday comes first in the calendar year as the primary insurer. It’s called the “Birthday Rule,” and here’s what new parents need to know about it.

The Birthday Rule is widely adopted by the health insurance industry. It states that the health plan of the parent whose birthday comes first in the calendar year will be designated as the primary plan. The year of birth of the parents is not considered. So if you were born April 6, 1989 and your partner or spouse was born November 12, 1987, your insurance would be considered the primary insurance for your child. And no, you don’t get a choice in the matter.

If you are appalled and a bit baffled, know that you are not alone. Medical insurance is complicated enough without hidden rules and regulations that are hard to understand. And this feels like another underhanded way insurance companies try to get around paying medical bills. But essentially this policy is put into place to determine coordination of benefits.

Yes, the child can be covered by both parents’ insurance policies. However, one must be listed as primary and the other as secondary. Then the plans have to coordinate benefits to ensure that neither you, a hospital or medical professional is reimbursed for more than the actual cost of the medical claims. The primary plan pays on the claim first based on the level of insurance and the secondary plan pays any remaining cost that is considered a covered benefit.

And if you are not already confused enough, there are some exceptions to this rule. If both parents happen to have the same birthday, the plan that has been used for the longest becomes primary. In the case of a divorce, a court order can override the Birthday Rule. And get this… when parents are divorced or separated, the plan of the parent that has custody is listed as primary. If there is a new spouse of the parent with custody, their insurance becomes secondary and the parent without custody pays last.

But here is the problem with the Birthday Rule. It assumes that premiums, deductibles and networks under both parents’ insurance policies are about the same. And most of us know from experience that is just not the case.

According to NPR, Mikkel and Kayla Kjelshus ran into this very problem. When Kayla gave birth to their first child, they were unaware of the Birthday Rule.  She listed her insurance plan, Blue Cross and Blue Shield of Kansas City, as the primary insurance because it had better coverage. Mikkel’s insurance, CommunityCare of Oklahoma, had a $12,000 deductible, high coinsurance obligation and a network focused in a different state. 

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When their daughter Charlie was born, there were complications that caused her oxygen levels to drop. She required care in a neonatal intensive care unit (NICU) and had to be transferred to another hospital. The bill for Charlie’s birth including her care in NICU totaled $270,951 and a claim was filed with Kayla’s insurance policy. 

Blue KC started to pay for Charlie’s care, but then canceled payments to both hospitals and Charlie’s neurologist, pediatrician and other physicians. The insurance company informed the couple that Mikkel’s insurance had to be listed as the primary insurance due to the Birthday Rule. CommunityCare of Oklahoma did pay Charlie’s bills, but the family was left with a remaining balance of $19,116. It took almost a year and half of back and forth between their insurance companies and the hospital until the bill was finally covered by Blue KC as the secondary insurer.

Navigating medical insurance can be a complicated matter. And there is no way to know all the things that you don’t know. It’s hard enough to understand basic insurance things like deductibles, annual out of pocket limits, copays and making sure you stay in network.  The last thing you want to worry about is how medical bills will be paid when you are a new parent. 

It is almost impossible to avoid all the pitfalls that can come along with health insurance. But shouldn’t someone be responsible for informing new parents about insurance policy rules like the Birthday Rule? This type of thing can have a profound effect on health insurance coverage for children, and parents should have this information up front. It seems like parents shouldn’t have to find out about this policy by receiving unexpected medical bills like the Kjelshus family.

As crazy as the Kjelshus’ story is, many would consider them lucky to have this problem. We live in a country where health insurance is treated as a privilege and not a standard protection. And although there have been some improvements with the Affordable Care Act, we still have a long way to go. We live in a country where people shouldn’t have to be concerned how they will pay for the birth of a baby. And new parents should be able to focus on building the bond with their baby.

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