Birthday Rule: What does this insurance term mean?

It’s Not Your Age that Matters 

The Birthday Rule is a term used by the health insurance industry to determine coverage for children whose parents have different plans.  The basic understanding of this rule is pretty simple, however it can get complicated under some circumstances.

Basics of The Birthday Rule

The primary insurance for a child is the same as the parent with the earliest birthday on the calendar.  A birthday is defined solely as the month and date, not the year.

A parent with a birthday on January 15^th would take precedence over a parent with a birthday on November 15^th, regardless of who is older in years.

If the parents have the same exact birthday, which is rare but could of course happen, age still isn’t a factor.  The health insurance plan that has covered the parent for the longest time becomes the primary insurance.

The Birthday Rule only applies when the parents have different health insurance.  Now you know why your insurance company asks if your spouse is covered by other insurance.

Exceptions to The Birthday Rule

The rule gets a bit more complicated when parents are separated or divorced.  There are generally four potential outcomes.  However, it’s important to note that not all plans follow The Birthday Rule.  It’s best to contact your health insurer prior to taking children to the doctor and running the risk of incurring unexpected medical expenses.

In all cases of separation and divorce, a court order about health coverage supersedes The Birthday Rule.  These are the four most common scenarios:

1. Joint Custody: The Birthday Rule applies as stated above
2. The health plan of the parent with legal custody*
3. The plan of the spouse of the parent with legal custody
4. The plan of the parent who does not have legal custody

*If the parent with primary custody is remarried, the new spouse pays second, assuming they have different health insurance plans.

COBRA is an interesting case.  If one parent has insurance through a current employer and a spouse through COBRA, the primary insurance goes according to the working parent.  COBRA is insurance from a former employer once terminated.

Another interesting case involves group plans versus individual plans.  With parents who are separated or divorced, regardless of The Birthday Rule, the parent with the group plan pays first.

Endorsed by the NAIC

The Birthday Rule is widely accepted within the insurance industry and is endorsed by a leading organization, The National Association of Insurance Commissioners.  The NAIC was created and is governed by the chief insurance regulators in all 50 states.  Through this organization, state insurance regulators establish standards, like The Birthday Rule.  To learn more about their work, visit the NAIC’s website.