What is the birthday rule?

The birthday rule is used by health insurance companies to decide which plan will pay first if both you and your spouse have separate health insurance plans and you have children covered by both policies.

It isn’t a law, but it’s a standard practice that determines which plan is the primary plan, and which should be secondary. 

How does the birthday rule work?

If you and your spouse have separate health insurance plans and you have listed your kids as dependent on both plans, then the primary insurance will pay for the treatment first. And if there are still any outstanding bills, then the secondary plan will cover up to 100% of the remaining cost.

The birthday rule places primary responsibility for your children based on whether you or your spouse was born earlier in the year. The year of birth doesn’t matter. It’s the month and day that plays into the birthday rule. 

What if you and your spouse have the same birthday? In this circumstance, the plan that’s been in place longer is primary.

Are there exceptions to the birthday rule?

There are a lot of different situations in which the birthday rule doesn’t apply. The main one to remember is that a court order will always override the birthday rule. Here are a few other situations to consider.

BirthDay Rule Situations
SituationDoes the birthday rule apply?
Parents divorced or legally separatedDepends on custody arrangement
Custodial parent remarriesNo
One parent has COBRANo
NewbornYes
Young adult with parent’s and spouse’s insuranceNo

Legally separated or divorced

If you’re legally separated or divorced and not remarried, the person with primary custody provides primary healthcare coverage for dependents. With joint custody, the birthday rule applies.

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 is primary.

Custodial parent is remarried

If you remarry, coverage works like this:

  • Your plan provides primary coverage
  • Your new spouse’s plan provides secondary coverage
  • Your ex-spouse’s plan fills any remaining coverage gaps

One parent has COBRA insurance

If you have COBRA and an employer-sponsored group health plan covers your current or former spouse, they provide primary coverage. COBRA insurance offers continuation coverage that’s more expensive than a health plan offered through work for an active employee.

For a newborn

When a baby is born, the mother’s insurance will cover the delivery and related costs. A newborn is automatically covered under the parent’s policy for 30 days, after which they need to be added. When each parent has their own policy, the birthday rule will apply.

A young adult is covered under a parent’s and spouse’s plan

The birthday rule doesn’t apply in this case. Instead, the plan that has been covering the young adult for the longest period of time will be primary. A young adult can stay on a parent’s plan until age 26.

Do all health plans follow the birthday rule?

Not all plans follow the birthday rule. It’s not a law but 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 primary 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.

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COBRA

Consolidated Omnibus Budget Reconciliation Act
People who lose their employer-sponsored health insurance may qualify for a COBRA plan. COBRA lets you keep your former employer's health plan, but you're responsible for paying all of the costs, including your former employer's portion.
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Medicaid

Low-income Americans qualify for Medicaid. Thirty-eight states expanded Medicaid eligibility, so lower-middle-class Americans may also be eligible in those states. Medicaid offers comprehensive benefits, but at little to no cost depending on your income. Each state has its own eligibility. Some states are flexible with Medicaid eligibility for people who are pregnant, a parent or disabled. If your household income is below 138% of the federal poverty level, you're likely eligible for Medicaid if you live in a Medicaid expansion state. That level is $17,609 for an individual, $23,791 for a family of two, $29,974 for a family of three and $36,156 for a family of four. Non-Medicare expansion states have stricter income guidelines. Check with your state's Medicaid program to see if you qualify.
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Parent's employer-based health insurance

The Affordable Care Act lets children stay on a parent's health plan until the age of 26. Having a child on a parent's health plan may or may not increase premiums. It depends on whether you already have family coverage when adding the child to the plan. If a parent already has family coverage, adding a child won't likely increase premiums. However, going from single or couple to family coverage could cause premiums to skyrocket. The average single coverage employer-sponsored plan premium is $1,186. The average family plan is $5,447.
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Spouse's employer-based health insurance

Most employers allow employees to add spouses to their health insurance. Going from single health coverage to a family plan may triple or quadruple your premiums. The average single coverage employer-sponsored plan premium is $1,186. The average family plan is $5,447. Not all jobs allow for spouse's coverage, so you'll want to check with your employer to make sure it's an option.
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Most people with private health insurance get their coverage through a job. employer-sponsored health insurance is usually cheaper than individual health insurance unless you qualify for Affordable Care Act subsidies. Job-based plans are generally less expensive because businesses often pick up more than half of employer-sponsored health insurance premiums. Kaiser Family Foundation estimates the average premiums for a single coverage employer-sponsored health plan is $1,186 and the average family plan is $5,447 annually.
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Preferred-provider organization (PPOs) plans are the most common type of employer-based health plan. PPOs have higher premiums than HMOs and HDHPs, but those added costs offer you flexibility. A PPO allows you to get care anywhere and without primary care provider referrals. You may have to pay more to get out-of-network care, but a PPO will pick up a portion of the costs.
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High-deductible health plans (HDHPs) have become more common as employers look to reduce their health costs. HDHPs have lower premiums than PPOs and HMOs, but much higher deductibles. A deductible is what you have to pay for health care services before your health plan chips in money. Once you reach your deductible, the health plan pays a portion and you pay your share, which is called coinsurance.
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Individual insurance/Affordable Care Act
The Affordable Care Act created insurance exchanges that allow people to compare plans. The health law also requires insurers to accept everyone and not charge them exorbitant rates. People who make below 400% of the federal poverty level qualify for subsidies to help pay for an ACA plan.
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Silver is the second most popular plan in the ACA exchanges, with 35% of people with a Silver plan. Silver has lower premiums than any plan except for Bronze. However, it has lower out-of-pocket costs than Bronze. Silver plans pick up 70% of the costs, while members pay 30% The average single coverage in a Silver plan is $481 monthly and $1,179 for a family plan.

Bronze is the most popular type of plan in the ACA exchanges, with 41% of members with a Bronze plan. These plans have the lowest premiums, but also the highest out-of-pocket costs in the exchanges. Bronze plans pick up 60% of the costs, while members pay 40%. The average single coverage monthly cost in a Bronze plan is $440 and $1,080 for a family plan.

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Platinum plans have the highest premiums but the lowest out-of-pocket costs. So, you pay more for the coverage initially but less than other plans when you need health care services. Platinum plans pick up 90% of the costs, while members pay 10%, Not many health insurers offer Platinum plans. Only 2% of members in ACA plans have a Platinum plan, so you may have trouble finding one. The average monthly premiums for single coverage in a Platinum plan is $706 and the average family coverage costs $1,460.

Gold plans have lower premiums than Platinum, but higher premiums than Silver and Bronze. Gold also has lower out-of-pocket costs than Silver and Bronze, but higher than Platinum. Gold plans pick up 80% of the costs, while members pay 20%. The average monthly premium for a single Gold plan is $596. Family coverage averages $1,426 per month.

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Health insurance FAQs

What is coordination of benefits?

Coordination of Benefits (COB) is how two insurance companies work together to cover an insured person. The primary health plan pays the costs first, and then the secondary plan will pick up any remaining costs.

Can both parents have health insurance for a child?

Yes.There’s no law against having a child on two plans, but one plan will always be primary. However, it’s worth examining the plans, coverage, and costs to see if it’s really worth paying for both plans to have secondary coverage.

What are the pros and cons of the birthday rule?

The health insurance birthday rule is an objective way of determining which plan should be primary, making it easy to decide. However, it prevents parents from deciding for themselves which plan is best to cover their children. One plan may have better benefits or work with a provider the other doesn’t.

How can you avoid the birthday rule when it comes to insurance?

The easiest way to avoid the birthday rule is to look at both health plans and decide which is the better choice. Then, move everyone to that plan and drop coverage with the other one.