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Unhappy birthday: An esoteric bit of insurance legalese throws new parents into six-figure debt

On January 27, 2021, NPR reported on a couple’s saga that nearly took them from proud new parents to the poorhouse. Read on to find out what it took to get out of the red.

As we like to point out having health insurance doesn’t mean that you’re actually covered. While this plays out in any number of frustrating (and dare we say, dubious) ways every day, here’s an example that surprised even us.

The story goes like this: A couple expecting a baby compared their insurance plans and put their daughter-to-be on the mom’s plan, since it had a lower deductible and was based in-state. They submitted the paperwork and assumed that was that. But when their baby was born and needed to stay in the NICU for a week, the mom’s insurance suddenly stopped payments to the hospital, the NICU, and the baby’s doctors. As the bills piled up, the couple learned that the choice of which plan to put their baby on wasn’t actually theirs to make—due to the “birthday rule.”

This regulation was stipulated by the National Association of Insurance Commissioners and has been adopted by most states. It mandates that a child whose parents have separate insurance must accept the plan of the parent whose birthday comes first in the calendar year for the child’s primary coverage. This meant that the couple was stuck with the husband’s plan—with higher co-insurance, a $12,000 deductible, and an out-of-state network—leaving them with nearly $20,000 in medical bills.

In this case, the parents were able to clear up the debt mess after a year and a half’s worth of banging their heads against the insurance wall. We hate to think about so many other new parents out there assuming they have a choice and getting hung out to dry based on a technicality.

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