April 2010 Health Care Reform Insights, "Extension of Dependent Coverage to Age 26"
Note: The Segal Company has published a new issue of Health Care Reform Insights that discusses the age-26 dependent coverage mandate in light of regulations published in May: "Rules on Coverage for Children Clarified."
Health Care Reform Insights is The Segal Company's new e-publication focusing on aspects of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act. This first issue discusses the law's provision requiring group health plans that provide dependent coverage for children to continue to make such coverage available for an adult child until the child turns 26 years of age. This requirement applies to group health plans in existence when the law was enacted (often called "grandfathered" plans).
Group health plans that provide dependent coverage for children must make that coverage available to adult children up to age 26 as of the first plan year that begins on or after October 1, 2010. For calendar year plans, the compliance date is January 1, 2011. However, for plan years that begin before January 1, 2014 (i.e., calendar years 2011 through 2013), the requirement only applies to an adult child who is not eligible to enroll in another employer-sponsored health plan.
A separate new tax code provision allows a group health plan to provide health coverage on a tax-free basis to any child of the plan participant through the end of the calendar year in which the child turns 26. This issue of Health Care Reform Insights addresses implications of these two new provisions for plan sponsors.
Until implementing regulations are issued, plan sponsors will need to rely on legal counsel for an authoritative interpretation as to the requirements for dependent eligibility.