Insurance Billing Rules

Quick Tip – What is the Birthday Rule?

How do you determine whose insurance is primary and whose is secondary when parent both have insurance coverage?

The answer to that question is known as “The Birthday Rule”.

The Birthday Rule

The birthday rule states:  The primary payer is determined by the parent whose birthday falls first within the calendar year.

If both parents happen to have the same birthday, the health insurance plan that has provided coverage longer is the primary payer.

Custody Rule

The Custody Rule applies to dependent children of divorced or separated parents (if it is not stated whose responsibility it is in the divorce decree).  In that case, the order of insurance payers follows this order:

  1.  The custodial parent
  2.  The spouse of the custodial parent
  3.  The non-custodial parent
  4.  The spouse of the non-custodial parent

If there does happen to be a divorce decree, then the responsible party is whoever the court has assigned it to and their plan is used.

Subscriber Rule

Let’s cover the subscriber rule while were at it.  The Subscriber Rule says:

  1.  When the subscriber has an active health insurance plan and a COBRA (Consolidated Omnibus Budget Reconciliation Act) plan, the active health insurance plan is the primary payer.
  2.  When the subscriber or the subscriber’s spouse has an active health insurance plan and a COBRA plan, the subscriber’s health insurance plan is the primary payer.
  3.  When the subscriber has an active health insurance plan and an inactive health insurance plan, the active health insurance plan is the primary payer.
  4.  When the subscriber has two active health insurance plans, the health insurance plan that has been active the longest is the primary payer.

Medicare Secondary Payer

We’re on a roll.  What about Medicare secondaries?

Medicare Secondary Payer (MSP) refers to Medicare benefits when Medicare is not primary.  All health care providers are required by Medicare to know how to determine when Medicare is the primary or secondary insurance for their Medicare patients.  So, Medicare is primary when the patient is:

  1.  65 or older and has a small group health plan through their own current employer or through their spouse’s current employer
  2.  65 or older with insurance through a retirement plan
  3.  Disabled and has a small group health plan through their own current employer or through their spouse’s current employer

It’s noteworthy that if the primary payer denies the claim, Medicare may or may pay depending on the circumstances.

– James