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The 'Birthday Rule' A Hidden Trap for First-Time Parents 🚨

A fathering carrying two kids with another kid running in a field

The "birthday rule" is a common insurance practice that can blindside first-time parents with a mammoth medical bill. Under the birthday rule, a newborn is automatically covered by the parent whose birthday comes first in the calendar year. This can be a problem if the parent with an earlier birthday has a less generous insurance plan than the parent with a later birthday.

Mikkel and Kayla Kjelshus, a couple from Minnesota, learned this the hard way when their daughter, Charlie, was born on December 31, 2020. Mikkel's birthday is in January, while Kayla's is in June. As a result, Charlie was automatically covered by Mikkel's insurance plan, which has a higher deductible and out-of-pocket costs than Kayla's plan.

Charlie had a complication during delivery that required her to spend seven days in the NICU. The NICU bill totaled $207,455, and Mikkel and Kayla were responsible for $15,000 of that amount.

The Kjelshuses eventually reached a settlement with Mikkel's insurance company, but they still had to pay $5,000 out of pocket.

What can parents do to protect themselves from the birthday rule?

There are a few things that parents can do to protect themselves from the birthday rule:

  • 📞 Talk to your insurance company. Find out how the birthday rule will apply to your newborn.

  • 👪 Consider switching to a family plan. If one parent has a more generous insurance plan than the other, consider switching to a family plan so that the newborn is automatically covered by the parent with the better plan.

  • 🛡️ Purchase a supplemental insurance policy. There are supplemental insurance policies available that can help to cover newborn medical costs.

It is also important to note that the birthday rule does not apply in all cases. For example, some states have laws that require insurance companies to cover newborns under the mother's insurance plan for a certain period of time.

If you are concerned about the birthday rule, talk to your insurance company and an experienced insurance broker. They can help you to understand your options and choose the best coverage for your family.



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