Final answer:
Regulation 56 specifies the order of benefits coordination for individuals covered by multiple health insurance policies to determine which plan pays first (the primary payer) and which one pays after (the secondary payer) to prevent duplicate payments.
Step-by-step explanation:
Regulation 56, officially known as the New York State Department of Financial Services (DFS) Regulation 56, establishes a coordination of benefits system. This system determines the order of benefits when an individual is covered by more than one health insurance policy. The purpose of the regulation is to specify the order in which the multiple health insurance carriers pay claims, to avoid duplicate payments, and ensure that the combined payment does not exceed 100% of the covered expenses.
Regulation 56 provides a sequence for insurers to follow, typically starting with the health plan that covers the individual as an employee, subscriber, or member (which is considered the primary plan), followed by plans that cover the individual as a dependent as the secondary payer. If there are multiple plans that cover the individual as a dependent, the parent's plan whose birthday (month and day) comes first in the calendar year will pay first. This is commonly referred to as the 'birthday rule'. However, there are exceptions, such as when one of the policies is a Medicare or Medicaid plan, or in cases of divorce or separation.