Legal UpdateApril 2021
THE BIRTHDAY SURPRISE!Have you ever wondered why you are asked if there are multiple health insurance policies covering your dependent(s)? Read on, and you’ll find out why. Bill and Linda are married and expecting their first child. Bill, who works as a freelance photographer, was born April, 1, 1987. Bill purchased a high deductible ($10K) health insurance policy on the open exchange because Linda’s health insurance policy through her EM residency program was too expensive to cover him also. Linda, who was born September 7, 1985, has a $0 deductible health insurance policy, which is wonderful, considering the impending healthcare expenses that come with giving birth in a hospital. On August 7, 2020, at 34 weeks, Linda gives birth prematurely, to Michael. Although Michael has a short uneventful course in the NICU, the 8 days in the hospital racks up $62k in hospital charges. Bill and Linda are thankful that Linda has a $0 deductible policy, but are stunned when they receive a $10k bill for their portion of the hospital charges. The “birthday rule” is a very common, but not universal, procedure (not a law) in the health insurance industry that coordinates benefits when a dependent is covered by parents with differing health insurance plans. The birthday rule states that the primary insurance plan is assigned to the parent with the earlier birthday in the calendar year. This has nothing to do with the age of the parent, only their month and day birthdate. Using our example above; Bill was born in April, and Linda was born in September. Under the birthday rule, Bill’s plan would be deemed the primary insurance plan. Again, Linda’s older age has nothing to do with the birthday rule calculus. In the end, Bill’s plan would pay on the claim first and cover all costs above the $10k deductible and Linda’s plan would be covering any remaining costs, conditioned upon the fact that Linda’s plan covers the benefits being requested. I’m sure you could imagine the economic nightmare that would further develop if one of the plans did not cover the treatments being provided (i.e. OB care), or the provider(s) were not in-network with the health plan. As with any rule, there are exceptions. Some of the more common exceptions apply to: (1) parents with the same birthday, (2) court orders, and/or (3) divorced/separated parents. Let’s take these in order. In the rare situation where both parents have the same month and day birthdate, the parent who has had the same insurance plan longer, will be deemed the primary policy. For those parents that have divorced/separated with joint custody of their child(ren), a court can determine which insurance plan becomes the primary policy, thus superseding the birthday rule. In the alternative, without a court order, the health insurance plan of the custodial divorced/separated parent pays first. If the custodial parent remarries, the plan of the new spouse will cover the dependent secondarily. The plan of the non-custodial parent will pay last. Lastly, if none of the exceptions apply, the fallback rule reverts to the parent who has had the same insurance plan longest. Most of us intuitively believe we are more covered by having two health insurance plans. Unfortunately, the birthday rule may ironically expose those with additional health care coverage to unanticipated expenses and punish those who marry a person with the wrong birth month! A little coordination of desired coverages during the time of insurance re-enrollment can avert some significant unanticipated healthcare expenditures. Hopefully you now know why they ask about those additional health insurance policies! Please be safe, well, warm, and dry. Kenneth Alan Totz, DO, JD, FACEP No information within this publication should be construed as medical or legal advice. Independent medical and/or legal advice should be sought based on each individual’s particular circumstances. |
