Health Insurance Rules
Below is a MRR and PLR article in category Finance -> subcategory Insurance.
Health Insurance Guidelines
Overview
Many dual-income couples choose to include their children on both group health insurance plans to maximize benefits. However, without a system in place to coordinate these benefits, you or your doctor might receive reimbursements exceeding the actual cost of the claim.
Coordination of Benefits
To prevent overpayment, insurance companies designate one parent’s plan as the primary and the other as secondary. When you visit the doctor, you'll often be asked about both to determine which plan pays first. The primary plan covers expenses up to its limits, with the secondary plan covering any remaining eligible costs.
Determining Primary Coverage: The Birthday Rule
The "birthday rule" is a common method used to determine which plan is primary. Under this rule, the plan of the parent whose birthday falls first in the calendar year is designated as primary. It's the birth date, not the birth year, that matters.
Exceptions to the Rule:
- Same Birthday: If both parents share the same birthday, the plan in effect the longest becomes primary.
- Current vs. Former Employment: If one spouse is currently employed and the other has coverage through a former employer, the employed spouse’s plan is primary.
- Divorce or Separation: Generally, the custodial parent’s plan is primary. If the custodial parent remarries, the new spouse’s insurance becomes secondary, with the non-custodial parent's plan providing a third layer of coverage. This can be adjusted by a court order, but insurers need to be informed.
Understanding Policies
These guidelines are commonly followed by insurers but are not mandated by law. Practices may vary, so it’s important to read your policy to understand your specific coverage details. If unclear, seek assistance from your employer’s benefits specialist or your insurer’s customer service.
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