If a child is covered under both parents’ health plans, a provision known as the “birthday rule” comes into play, guiding how the coordination of benefits will work.
The birthday rule says that primary coverage comes from the plan of the parent whose birthday (month and day only) comes first in the year. The other parent’s health plan then provides secondary coverage.
This article will explain how the birthday rule works, when it applies, and what parents need to take into consideration when deciding whether to maintain double coverage for a child.
Most people tend to have just one health insurance policy. But it’s possible to have more than one, especially if a household has two parents whose jobs both offer employer-sponsored health coverage.
Although there’s usually an option to put the whole family on one policy, that’s not always the best solution. And it’s not always possible, as some employers don’t offer coverage to spouses, particularly if they have an offer of coverage from their own employer.
When each parent has their own health plan, they both have the option of adding their children to their plan. Many families choose to add children to just one parent’s plan, but some choose to add them to both plans, especially if the employers cover a significant portion of the monthly premiums.
This double coverage approach can be a money-saver, as the second plan can be used to cover expenses that would otherwise be out-of-pocket costs under the first plan.
Insurance companies and self-insured employers use what’s called coordination of benefits to make sure that people don’t end up with benefits that exceed the cost of the claim—in other words, you can’t make money from a medical claim by having multiple insurers pay benefits.
Coordination of benefits means that one insurance plan is designated as the person’s primary coverage and the other is secondary. When there’s a medical claim, the primary insurance pays first, paying benefits as if it’s the person’s only insurance.
Then the secondary insurer steps in and picks up some or all of the remaining out-of-pocket costs that the primary insurance didn’t pay (i.e., the deductible, copay, or coinsurance, or costs for specific services that aren’t covered under the primary plan but that are covered under the secondary plan).
The specifics vary in how much the secondary insurer will pay—it depends on the plan and the medical claim. In some situations, it’s clear which insurance is primary and which is secondary:
The birthday rule applies when a child is covered under both parents’ health plans. Primary coverage comes from the plan of the parent whose birthday (month and day only) comes first in the year, with the other parent’s health plan providing secondary coverage.
Let’s say Abigail and Armando each have their own employer-sponsored health insurance, and they’ve opted to add their children to both plans. Abigail’s birthday is August 20, and Armando’s is November 5.
Since Abigail’s birthday comes first in the year (it doesn’t matter how old they are, as the birth year is irrelevant), her plan will provide primary coverage for the children, and Armando’s will be secondary.
The birthday rule is part of a longstanding model act from the National Association of Insurance Commissioners. States and insurers can use different approaches, but most have adopted the birthday rule as a uniform, unbiased means of determining primary and secondary coverage in situations where a child has coverage under both parents’ plans.
Although the birthday rule is the general standard, there are various situations where other procedures are followed in determining which policy is primary:
If both parents have the same birthday, the primary plan will be the one that has been in effect longer. So in the example above, if Abigail and Armando both had an August 20 birthday, but Armando had been covered under his plan since 2006 while Abigail had only been covered under her plan since 2014, Armando’s plan would be primary.
If the parents are divorced with joint custody and a court has not specified which parent is responsible for providing health coverage for the dependent children, the birthday rule would be used to determine which plan is primary if both parents maintain coverage for the children.
However, it’s common in a divorce for one parent to be responsible for maintaining coverage. In that scenario, that parent’s health plan would be primary, regardless of the parents’ birthdays.
If the custodial parent then remarries and the new spouse has their own health insurance plan to which the child is also added, the new spouse’s coverage becomes secondary, with the non-custodial parent’s acting as a third line of coverage, only covering charges that aren’t paid by the primary or secondary plans.
If one parent is covered under COBRA or state continuation coverage and the other has active employee coverage (and the children are covered under both plans), the COBRA or state continuation plan will be secondary.
If a young adult has coverage under a parent’s plan and a spouse’s plan, the plan covering them for longer will typically be primary. But if the coverage under both plans took effect on the same day, the birthday rule would apply.
The insurers would look at the parent’s birthday (or both parents’ birthdays, if the person has coverage under two parents’ plans in addition to a spouse’s plan) as well as the spouse’s birthday to see which comes first in the year. The policy linked to the person with the earliest birthday would be primary.
Note that if a young adult has coverage under a parent’s health plan as well as their own employer’s plan, their own employer’s plan will be primary, and the birthday rule would not apply.
Most health insurance policies are required to automatically cover a new dependent (newborn or newly adopted child) initially, but you’ll have to request that the child be added to your policy (within 30 to 60 days, depending on the plan) in order to continue that coverage going forward.
This is part of another model act, although some states have set their own requirements regarding coverage for new dependents.
In situations where each parent has their own health plan, a newborn or newly adopted child may end up in a coordination of benefits scenario, even if the parents don’t intend to maintain more than one policy for the child.
An NPR story about a newborn baby in Kansas is a good example of unexpected coordination of benefits. The parents intended to cover the child under just the mother’s health plan, which offered more robust coverage. But for the first month of the baby's life, she was automatically covered under both parents' policies.
Because the father also had his own health plan and his birthday was earlier in the year, the mother’s insurance initially rejected the bills, noting that they should have been sent first to the father’s health insurance.
The situation eventually got resolved, with the mother’s insurance picking up the tab for the bills the father’s plan didn’t pay. But it took the parents more than a year of wrangling with their insurers to get it all sorted out.
If you’re expecting a new baby or have a pending adoption and both parents have their own health coverage, it’s important to understand how the coordination of benefits will work. You’ll want to talk with both insurance plans to see how the child’s potential medical expenses will be handled.
The birth or adoption of a child is a qualifying event that allows the family to make changes to their health coverage. It may be in the family’s best interest to move the whole family onto one policy.
But if separate policies are maintained, you’ll want to make sure you understand how the child will be covered immediately after the birth or adoption, even if you intend to only add the child to one parent’s policy.
As a side note, it’s important to understand that new dependent coverage is not necessarily provided if the new parent is covered under their own parents’ health insurance.
The Affordable Care Act requires health plans to allow young adults—even if they’re no longer tax dependents—to remain on their parents’ health coverage until age 26 . But that plan does not have to (and generally won't) extend coverage to the dependent of a dependent.
And health plans are not required to cover costs associated with labor and delivery for dependents.
So although you might be covered under a parent’s health plan, your child—their grandchild—likely cannot be added to the policy.
You will, however, have an opportunity to purchase an individual market plan for the baby, or you may find that they’re eligible for Medicaid or CHIP depending on your financial circumstances.
The birthday rule is used to determine how coordination of benefits work when a child is covered by both parents' health insurance policies. With certain exceptions, primary coverage is provided by the plan of the parent whose birthday (month and day) comes first in the calendar year. The other parent's policy will provide secondary coverage.
If your child can be covered under your health insurance plan as well as their other parent's health insurance plan, maintaining double coverage might be beneficial. This is especially true if both plans are heavily subsidized by an employer. But it's also important to understand how the birthday rule works and to be aware of which plan will be primary and which will be secondary.
If you have a clear preference for which policy would provide better coverage, you might prefer to insure the child on just the policy—especially if the other parent's policy would end up being primary under the birthday rule.