You probably know that under the Affordable Care Act dependents can stay on their parents’ insurance until the age of 26. But you may not be as clear as on what happens if you list your child as a dependent on both you and your spouse’s group health care plan.
Insurance companies typically follow what’s known as the “health insurance birthday rule.” The rule coordinates benefits for dependents covered under more than one health plan.
This ensures that neither you nor your health care provider gets reimbursed above and beyond the actual total cost of your medical claim. So, without the birthday rule, the same claim could get paid by multiple insurers.
The health insurance birthday rule isn’t law. Instead, insurers often abide by this practice to determine which policy is responsible for providing primary health care coverage for your dependent(s) and which plan provides secondary coverage.
The birthday rule is part of health insurers’ coordination of benefits (COB). COB provides a process for payers that allows them to avoid overpayment. The primary health plan pays the costs first. If there are still unpaid health costs, the secondary payer then handles up to 100 percent of the rest of the costs as long as it's covered under the plan.
Let's look at an example. Let's say you go to the doctor and the services come to $300. The primary plan picks up its amount. So, if that's $200, that leaves $100 that's unpaid. A secondary insurer then picks up to 100 percent of the rest of the costs. Instead, you may have to pay the remaining $100.
How does your birthday decide coverage?
The earliest birthday decides coverage unless there is a court ruling that states otherwise. So, if your birthday is earlier in the calendar year than your spouse, your insurance will be your dependents’ primary health plan. This rule applies even if your spouse is older than you. The year of birth doesn’t matter. It’s the month and day that plays into the birthday rule.
To put it in simple terms, if your birthday is in March and your spouse’s is in April, then your plan will provide primary health coverage for your children or dependents.
What if you and your spouse have the same birthday? At that point, the plan that has covered either of you the longest will become the primary plan.
What if I’m legally separated or divorced?
If you’re legally separated or divorced and not remarried, the person with primary custody provides primary healthcare coverage.
However, this stipulation only applies if a group plan covers both parents. If the parent with primary custody has an individual plan and the non-custodial parent has a group plan, the non-custodial parent’s health plan provides primary coverage for your dependents.
What if I’m remarried?
Getting remarried complicates COB, but there’s still a process in place.
If you’re remarried:
- Your plan provides primary coverage
- Your new spouse’s plan provides secondary coverage
- Your ex-spouse’s plan fills any remaining coverage gaps
What if I have COBRA?
If you have COBRA and an employer-sponsored group health plan covers your current or former spouse, he or she provides primary coverage. COBRA offers continuation coverage that’s more expensive than a health plan offered through work for an active employee.
One important thing to keep in mind is that the health insurance birthday rule applies only if there isn’t a court order. That may include a child support ruling that designates a specific parent’s insurance as the primary health plan. However, if this parent doesn’t have health coverage or can’t cover dependents, the other parent assumes the responsibility for providing primary coverage.
The health insurance birthday rule allows you to maximize benefits for your dependent(s). For instance, the secondary plan may be used to cover the amount left unpaid by the primary plan.
Before your children or dependents visit a doctor, make sure you understand how benefits will be coordinated between you, your spouse or former spouse’s plans. Knowing what will be covered — and how much of it — will help you avoid potential coverage gaps that could lead to unforeseen health care expenses.
Do all health plans follow the birthday rule?
Not all plans follow the birthday rule. It’s not a law, but instead, a common claims practice that helps insurers figure out who pays claims.
This means it's essential that you read your health insurance policies carefully and work with your insurance companies to understand how the insurer coordinates benefits. It's a good idea to determine which plan is the primary and which is the secondary before you start incurring medical costs.
Contact your health plan if you can’t figure out how the birthday rule affects your insurance and which insurer pays first.