Adult Child Coverage Rules Issued

Employers now have some guidance to comply with the new health care reform law related to employees’ adult children.  The Departments of Labor, Health and Human Services and the Internal Revenue Service have issued the following rules for employers:

· Coverage cannot be conditional based on student status, residency, marital status or parental financial support.

· Special employer surcharges on employees for the expanded coverage are not allowed.  However, employers may base employee premiums on the number of covered dependents.

· Coverage must be extended through the day before a child turns 26 and can be continued on a tax-favored basis through year-end when the child turns 26.

· Coverage mandate does not apply until Jan. 1, 2014 for children eligible to enroll in another employer-sponsored plan.

· Employees must be informed of the extension of coverage and given 30 days to enroll eligible older children.

· Children who lose coverage when they turn 26 can enroll in COBRA.

· Extension of coverage must begin on the first day of the plan year that starts after Sept. 23, 2010.  Children who had previously lost coverage because of their age will be able to enroll if they are younger than 26, regardless of whether they ever had coverage through the employer’s plan.

From Business Insurance, May 17, 2010 issue, pp. 3 and 25, and from the Department of Labor, Health and Human Services and the Internal Revenue Service.