If the Parents are Divorced Which Insurance is Primary?
In understanding how to determine which health insurance policy is to be used for divorced parents or guardians, the procedure on how to prioritize which one, must be explained first. Generally, two parents who are enrolled in group health plans follow what we call the “birthday rule”, when it comes to coordinating coverage for their children or dependents. Note that this procedure is an informal one, but has since been widely accepted by companies in the health insurance industry.
The National Association of Insurance Commissioners clarifies how the birthday rule is used. This rule states that a parent, whose birthday falls earlier in the calendar year, shall be assigned as the primary plan. For example, if Martha and George both have children and are enrolled in a group health plan; how will we determine which of the two plans will be the primary one? Martha was born in February. Meanwhile, George was born in December. Therefore, Martha’s health plan will be the designated primary plan for their children. In addition, when using the birthday rule, the year of birth does not matter. Age will not be a factor as well. For as long as a parent’s birthday comes first in the calendar year, then it will be treated as the primary account.
Both children and adults can receive coverage from two or more health plans. Some individuals have multiple health insurance policies. The benefits for the children are going to be coordinated by the policies. The reason for this is to assure that the physician, hospital, and even the patient are not given an amount in excess of the exact cost for the medical claim. By having primary and secondary policies, where they children are covered, errors in payment or reimbursement can be prevented. The logic for this is the plan or policy which is considered the primary one, pays for an insurance claim first. Should there be excess cost which can no longer be accommodated in the primary plan, then the balance shall be settled by the secondary plan. This is only true if the secondary plan includes medical care as part of its covered benefits. Insurers won’t compensate for services that are not covered in their health policies.
In the case divorced couples, it is common to find that each parent has listed their children on their individual plans. It is done in order to maximize benefits as well as to make certain that the children covered no matter where they are. This is especially helpful when the former spouse resides in another city or state and the children visit there often. Bear in mind that most HMO physician networks are only available locally.
When more than one plan covers the dependents or the children, it matters who has custody of them. The parent who is given the legal guardianship over the children pays using his or her policy first. The birthday rule does not apply to children who belong to a blended family or whose parents are divorced because there is usually a court decision concerning the children’s health coverage. The statement issued by the court supersedes the birthday rule. If the child has a step parent and a custodial parent, the plan of the custodial parent shall be used first.