Secondary Health Insurance for Children

With a significant number of families relying on income from both spouses, it's not uncommon for families to be covered by two or more health insurance plans. Although double coverage may seem like an easy way to ensure that all medical bills get paid with the smallest out-of-pocket expense, the process can get confusing and complicated. The insurance carrier that pays first is called the primary carrier, and the carrier that pays the remaining balance is called secondary.

Coordination of Benefits

• To avoid paying physicians and facilities twice for the same service, insurance companies must work together and effectively communicate. The process of properly dividing and sharing payment for medical services between insurance carriers is known as "coordination of benefits." When patients are covered by multiple plans, coordination of benefits is essential.

The Birthday Rule

• To determine which insurance company is primary for dependent children covered by more than one health insurance policy, carriers use the birthday rule. This rule states that the medical plan belonging to the parent whose birthday arrives earlier in the year is always the primary plan, regardless of the actual age of the parents. Any remaining balance gets shifted to the carrier covering the parent with the later birthday.

Divorced Parents

• When children of a divorced couple remain covered on both parents' health insurance plans, the primary carrier is always the one belonging to the parent with residential custody of the children. After the primary plan pays out its designated portion of the bill, any remaining balance becomes the responsibility of the carrier covering the other parent. In situations where both parents maintain an equal residential custody split, the birthday rule is used to determine primary and secondary plans.

Stepparents

• Children of divorced parents who remarry might end up with coverage under three, or even four, health insurance plans if the stepparents also include the children on their own medical policies. In these cases, the plan belonging to the natural parent with residential custody is primary, and the plan covering the new stepparent is secondary. If any balance still remains after both of these plans pay their benefits, responsibility for those bills is transferred to the policy belonging to the natural parent without custody. In the even rarer case where a balance is still left over after the first three health insurance plans contribute, the last remaining portion gets paid by the policy belonging to the new spouse of the natural parent without custody.