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Proposed Law Would End Health Insurance 'Birthday Rule' That Snags New Parents

For Charlie Kjelshus, "the birthday rule" meant that dad Mikkel's plan ― with a high deductible and coinsurance obligation ― was deemed her primary coverage after her NICU stay as a newborn. Mom Kayla's more generous plan was considered secondary coverage. This left her parents with a huge bill.
For Charlie Kjelshus, "the birthday rule" meant that dad Mikkel's plan ― with a high deductible and coinsurance obligation ― was deemed her primary coverage after her NICU stay as a newborn. Mom Kayla's more generous plan was considered secondary coverage. This left her parents with a huge bill.

When Kayla Kjelshus gave birth to her first child, the infant spent seven days in the neonatal intensive care unit, known as the NICU. This stressful medical experience was followed by an equally stressful financial one. Because of an obscure health insurance policy called the "birthday rule," Kjelshus and her husband, Mikkel, were hit with an unexpected charge of more than $200,000 for the NICU stay.

Now, six months after Kaiser Health News and NPR published a story about the Kjelshus family's experience, new parents may be spared this kind of financial uncertainty if lawmakers pass a bill that would give parents more control when it's time to pick a health insurance policy for their child.

The new proposed law would eliminate the birthday rule. That rule dictates how insurance companies pick the primary insurer for a child when both parents have coverage: The parent whose birthday comes first in the calendar year covers the new baby with their plan first. For the Kjelshuses of Olathe, Kan., that meant the insurance held by Mikkel, whose birthday is two weeks before his wife's, was primary, even though his policy was much less generous and based in a different state.

"It's an outdated policy," Mikkel Kjelshus said. "Nowadays both parents typically have to work just to make ends meet." Two jobs often means two offers of health insurance — and while double coverage should be a good thing, in practice, it can lead to a bureaucratic nightmare such as the one the Kjelshuses faced.

U.S. Rep. Sharice Davids, D-Kan., introduced Empowering Parents' Healthcare Choices Act, a bill that would do away with the birthday rule and a "coordination of benefits policy" that trips up first-time parents when it's time to sign up a new baby for insurance.

"When I heard about the Kjelshus family's story, I knew there had to be a way to help," Davids said. "Parents should have the power when it comes to their new baby's health care coverage."

For Charlie Kjelshus, the birthday rule meant her dad's plan — with a $12,000 deductible, a high coinsurance obligation and a network focused in another state — was deemed her primary coverage. Her mom's more generous plan was secondary. Confusion over the two plans caused a tangle of red tape for the family that took almost two years and national media attention to resolve.

This model regulation was set by the National Association of Insurance Commissioners and adopted by most states, including Kansas, said Lee Modesitt, director of public affairs with the Kansas Insurance Department.

It is a somewhat arbitrary rule that could be fair if all jobs offered health plans with similar coverage. But for many families, one partner's plan is much more generous.

"It feels awesome," Mikkel Kjelshus said of the news that a change has been proposed. "We really didn't want this to happen to anyone else."

To be enacted, the bill would need to pass the House and Senate before receiving the president's signature. Davids was elected to Congress in 2018, flipping a seat in Overland Park, Kan., that a Republican had held for a decade. She was reelected in 2020 and is the only Democrat in Kansas' House delegation.

Ellie Turner, a spokesperson for the congresswoman, said Davids is talking with colleagues in the House to garner additional support.

"It's becoming clear that the Kjelshus family is not alone in this experience," Turner wrote in an email. "We are going to continue working to raise awareness and gain momentum for a birthday rule fix, because every family deserves a choice when it comes to their child's health."

As they await the arrival of their second child, this time around the Kjelshuses family have a better idea of how the health insurance will work. And, much like the first time, they feel prepared.

"We've got the crib. We've got the baby stuff. It's a lot less stress this time around," Mikkel Kjelshus said. "We kind of know what we're doing."

Bill of the Month is a crowdsourced investigation by Kaiser Health News and NPR that dissects and explains medical bills. Do you have an interesting medical bill you want to share with us? Tell us about it!

Copyright 2021 Kaiser Health News. To see more, visit Kaiser Health News.