How the birthday rule determines health insurance coverage

For people who coordinate health plans, the birthday rule impacts which insurance pays. Read on to learn more about the health insurance birthday rule.

Although it would be nice, your health plan’s birthday rule doesn’t refer to insurers sending you a special discount, benefit, or coupon for free ice cream to celebrate your birthday. Instead, it is a set of guidelines that might trip you up if you have kids and you aren’t paying attention to your health insurance plan — the birthday rule is an informal procedure that the health insurance industry has widely adopted for the coordination of benefits when children are listed as dependents on both parents’ group health plans.

What is the birthday rule for insurance?

Under the birthday rule, the health plan of the parent whose birthday comes first in the calendar year is designated as the primary plan. It doesn’t matter which parent is older – the year of birth isn’t a factor. So, if your birthday is July 15, 1985, and your spouse is September 17, 1983, your health plan would be considered primary because your birthday comes first in the calendar year.

How does the birthday rule work in health insurance?

Children — and adults — can be covered under more than one health plan. When you’re covered under multiple health insurance plans, the plans will have to coordinate the benefits. This is one of the reasons a health plan wants to know if you or your spouse has other coverage; it’s more than just curiosity.

The plans coordinate benefits to make sure that neither you nor your doctor is paid more than 100% of a medical claim’s actual cost. They don’t want you, or a hospital, pocketing extra money.

For example, let’s imagine that you are about to have a baby with your spouse. Your birthday comes sooner in the calendar year than theirs — your health plan would be considered primary and your spouse’s would be secondary. However, your health plan is much more expensive and doesn’t offer the same level of benefits as your spouse’s. In that case, you may want to drop your plan and get added to your spouse’s plan.

A real-life example has led to proposed legislation that would end the birthday rule but hasn’t moved forward in Washington as of June 2022. A couple’s infant had to spend a week in a neonatal intensive care unit, or NICU. After the newborn came home safely, the couple was surprised to get hit by a $200,000 bill for the NICU stay.

This unwelcome surprise was due to the birthday rule policy. It turned out that the husband was born two weeks before his wife, making his insurance primary. Unfortunately, the husband’s policy covered far less and was based in a different state. The mother’s insurance was far more generous, but it took years of cutting through red tape and national media attention to rectify the issue.

And though some in Congress are working to ban the birthday rule, the legislation is still in the early stages and the birthday rule will likely impact most policyholders for a long time.

Birthday Rule Examples

Here are some basic examples of how the birthday rule functions:

1. A married couple has a newborn baby. The first spouse’s birthday is August 15, 1990 and the second spouse’s birthday is December 10, 1988. Because the first spouse’s birthday is earlier in the calendar year, their health plan is considered primary even though their spouse is older.
2. If a married couple divorces, part of the settlement usually involves deciding who will provide health insurance for the children. In this case, the court decides which parent’s health insurance is the primary. However, if this health insurance coverage is not decided in the settlement, the birthday rule remains in place and the parent with the birthday earlier in the year has the primary policy.
3. Let’s say a parent gets a divorce, remarries and their new spouse lists their stepchild on their healthcare policy. The child is also on the biological parent’s health insurance. The birthday rule applies – if the stepparent has a birthday earlier in the year than the biological parent, their stepparent’s policy is primary.

Insurance birthday rule guidelines

The birthday rule is different from policy to policy and state to state. Remember, it isn’t a law. Instead, the birthday rule is more of a set of guidelines many insurers follow where permitted.

The birthday rule was created to solve issues when children are listed on both of their parent’s health insurance. If a claim needs to be filed for the child, which policy covers it?  

To prevent those kinds of payment problems, when children are covered under each parent’s group health plan, one plan is designated as primary and the other secondary.

• The primary plan pays the claims first.
• The secondary plan pays any remaining costs not covered by the primary plan — but only if the medical care is a covered benefit under the secondary plan.

A secondary plan won’t reimburse you for services it doesn’t cover. That includes the provider – if the doctor isn’t part of the secondary plan’s network, the plan may not cover their portion. That’s why it’s vital to ensure you go to providers in both plans’ networks.

Exceptions to the birthday rule

There are exceptions to the birthday rule that can make its implementation a bit complicated.

Same birthdays: If both parents happen to have the same birthday, the plan that has covered a parent longer pays first.

Court Order: The Employee Retirement Income Security Act of 1974 (ERISA) designates that the birthday rule can be applied to determine which plan is the primary health plan for the children of working parents, according to the child support guidelines from the Center for Policy Research. While the parent whose birthday comes first is still the primary insurance plan, the birthday rule doesn’t apply to children whose parents have divorced or are members of a blended family. A court order about children’s health coverage after a divorce supersedes the birthday rule. If children live with a custodial parent and stepparent, the custodial parent provides the primary insurance plan, regardless of whether the stepparent’s birthday comes first.

Divorce or separation: When two or more plans cover your children as dependents if you’re divorced or separated, the plan of the parent who has custody pays first. The plan of the new spouse of the parent with custody pays second. And finally, the plan of the parent who doesn’t have custody pays last.

Active employees: Your plan is primary if you’re employed and have health insurance through your employer and your spouse has coverage through a former employer (such as COBRA), and your children are listed as dependents on both plans.

Group health and individual health plans: The rules are also different if you and your ex-spouse have different types of health plans. If you have a group health plan and your former spouse has an individual plan, the group plan pays first, regardless of the birthday rule.

Does Birthday Rule Apply?

The graph below gives some example scenarios of when the birthday rule does and doesn’t apply.

How coordination of benefits works with the birthday rule

The birthday rule is used by health insurance companies to coordinate benefits. In situations where a child is covered by different health plans due to each parent having a separate policy, insurers use the birthday rule to decide which parent’s policy is primary and which parent’s policy is secondary.

It’s not always wise to keep both a primary and secondary plan.

Imagine if you were about to add a newborn to your policies as parents. In this instance, you’ll want to compare the health plans and see whether it would make sense to drop your plan and add you and your newborn to your spouse’s health insurance.

If you were to do that before the child is born, you’ll have only one plan (your spouse’s). Before the child is born, it’s wise to compare plans and see whether it’s wise to keep two plans or go with the secondary plan only.

Remember, the birthday rule and its exceptions aren’t insurance laws. Rather, they’re common claims practice — and not all plans follow these customs.

You should read your policy or membership agreement to see what procedure your health insurer has in place. If you’re still uncertain, contact your plan’s customer service department. And make sure you know the payment procedure before you or your children visit the doctor or you may find yourself personally responsible for some unexpected medical bills.

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