On Monday, May 10, 2010, the Employee Benefits Security Administration (EBSA) of the Department of Labor, along with the Departments of the Treasury and Health and Human Services released Interim Final Rules (available at http://www.dol.gov/ebsa/pdf/dependentcoverage.pdf ) implementing the extension of dependent coverage for children up to age 26 as part of the requirements under the Patient Protection and Affordable Care Act (referred to as The Affordable Care Act). The EBSA also released a Fact Sheet (available at http://www.dol.gov/ebsa/newsroom/fsdependentcoverage.html) and FAQs (http://www.dol.gov/ebsa/faqs/faq-dependentcoverage.html) describing the extension of dependent coverage.
Under the Act, all plans and insurance issuers that offer dependent coverage must offer coverage to an enrollee’s adult children whether married or unmarried until the child reaches age 26, even if the adult child no longer lives with the parents, is not a dependent on a parent’s tax return or is no longer a student. (Plans that do not provide dependent coverage are not required to do so under the Act.) However, this extended eligibility does not apply to the adult child’s spouse or children. This expansion of eligibility is effective for plan or policy years beginning on or after September 23, 2010. Calendar year plans will have to comply as of January 1, 2011. Under a transition rule, if the adult child has another offer of employer-based coverage other than a parent’s coverage, plans would generally not have to provide extended dependent coverage to that child until 2014.
For plan or policy years beginning on or after September 23, 2010, plans and issuers are required to give adult children who qualify a special enrollment opportunity that continues for at least 30 days even if the plan offers a periodic open enrollment period. Plans and issuers must provide a written notice of this special enrollment opportunity no later than the first day of the first plan or policy year beginning on or after September 23, 2010. The rules provide that any qualified adult child must be offered all of the benefit packages on the same terms as are available to similarly-situated individuals who did not lose coverage due to a cessation of student status.
HHS Secretary Kathleen Sebelius has asked leading insurance companies to begin covering adult dependent children voluntarily before the Act’s implementation date. Over 65 companies have agreed to cover adult dependent children who graduate from school or age off of their parent’s coverage before the Act’s implementation date, including Aetna, Blue Shield of California, CIGNA, Kaiser and Wellpoint (parent of Anthem).
Regulations relating to grandfathered health are expected to be published in the very near future. The regulations released on May 10 included a statement that the Departments anticipate that the regulations on grandfathered plans will make clear that a plan will not lose its grandfathered status if it voluntarily complies with the age 26 rules before being required to do so.