Young Adult Dependent Coverage To Age 26
The new health care reform law requires group health plans that provide dependent coverage for children to continue to make such coverage available for an adult children, under their parents plan, until the child turns 26 years of age. The rules generally take effect for plans on their first renewal on or after September 23 of this year.

Key issues addressed in the recent regulations are summarized below:
The regulations restate the general rule that group health plans or health insurers that offer dependent coverage must make such coverage available to adult children until such children attain age 26.

A group health plan or insurer may base eligibility for adult child coverage only in terms of the relationship between a child and participant, and may not deny or restrict coverage based on factors such as: financial dependency, residency, student status, employment, eligibility for other coverage (except under the pre-2014 grandfather rule described below), or marital status. Unlike the tax exclusion guidance in the IRS' Notice 2010-38, which generally defines a "child" as a son, daughter, stepchild, adopted child, or foster child, the regulations do not provide a definition of "child" for these purposes.

Plans and insurers are not required to cover grandchildren -- a child of an adult child receiving coverage -- or the spouse of an adult child. The regulations confirm that the coverage requirement applies to children whose eligibility for coverage previously ended, or who were denied coverage or were not eligible for coverage because of age. Moreover, the plan or insurer is required to provide such children who become eligible for coverage as a result of the new coverage requirement with a special 30-day enrollment period.

Grandfather Rule:
For plan years beginning before 2014, a grandfathered group health plan (generally, a plan that is in existence on March 23, 2010) may exclude an adult child if the adult child is eligible to enroll in an employer-sponsored health plan other than a group health plan of a parent.

The following examples illustrate the government's recent guidance concerning coverage, enrollment and notification requirements for the Dependent Coverage to Age 26 provision:

An employee whose 23-year-old child aged out and terminated coverage under an employer's calendar-year plan must be provided notice by January 1, 2011, with at least a 30-day opportunity to enroll the child retroactively to January 1, 2011.

An employee who switched to a lower-cost benefit option when the employee's child aged out must be provided notice and at least a 30-day opportunity to enroll themselves and their adult child in any coverage option available to similarly situated individuals who enrolled when first eligible.

In the case where an employee's child had received COBRA continuation coverage upon aging out, the employee must be provided notice and the employee and child must be given at least a 30-day opportunity to enroll in a coverage option other than COBRA.

In the case of a child who had already aged out of coverage at the time the employee parent joined the plan, the plan must provide the employee notice and at least a 30-day opportunity to enroll the child.

For more information on the Dependent Coverage To Age 26 rule please contact your Stratford Representative at 866-217-9053.