Covering Employees’ Adult Children

 The new health care reform law will extend group coverage to adult children of employees until age 26.  But what exactly does that mean for employers?

· The effective date for this new provision is the beginning of the plan year that begins after September 23, 2010.  Many companies will see this new provision take effect next year.

· Although the main health care reform bill which Congress passed did not apply to adult children who were married, a later revision made their marital status irrelevant in determining the eligibility of adult children in their parent’s employer’s plan.  However children’s spouses are not covered at this point.

· There is still some confusion about how long coverage must be extended.  One part of the law states that employers must offer coverage until an adult child’s 26 birthday.  However, in another section, coverage can be continued on a tax-favored basis for adult children through the end of the year in which they turned 26.

· The  law is also unclear about whether coverage must be extended to adult children eligible for COBRA coverage from a previous employer or through a spouse. 

· Children are eligible to remain on their parents’ plan until age 26 unless they are eligible for coverage in another employer’s plan.  However, beginning in 2014, the requirement will apply even if they are eligible for coverage from his or her employer.  That is a major change from typical group plans, when coverage was terminated at age 19 unless they were full-time students.

Obviously in today’s economic environment, parents are anxious about retaining coverage for their adult children.  To ease confusion and provide information, employers may want to mail notices and post messages to their employees now, even if the effective date is several months away.

From Business Insurance, April 12, 2010 issue, pp. 3 and 29, and April 19, 2010 issue, pp. 4 and 21.