Interim Final Rules Issued Covering Children Until Age 26
On May 10, 2010, the Internal Revenue Service, U.S. Department of Labor and the U.S. Department of Health and Human Services issued interim final rules for group health plans and health insurance issuers relating to dependent coverage of children to age 26 under the Patient Protection and Affordable Care Act (the “Act”).
The rules generally apply to group and individual health plans for plan years beginning on or after September 23, 2010 and applies to both insured and self-insured health care plans and to all group health care plans and health insurance issuers offering group or individual health insurance whether or not such coverage qualifies as a grandfathered health plan (coverage existing as of March 23, 2010).
The rules clarify that, with respect to children who have not attained age 26, factors such as financial dependency, residency, student status, employment, or eligibility for other coverage cannot be used to deny coverage.
Plans cannot exclude coverage irrespective of whether or when a child was enrolled in a plan and became ineligible because of age but transitional coverage for a child is available where coverage ended or was denied because of age.
Plans cannot deny or limit coverage based on whether the child is married. However, a plan is not required to cover the spouse of the eligible child, or the child’s children.
Surcharges for coverage of eligible chldren are not allowed except where surcharges apply regradless of age and plan benefits cannot vary based on the age of the child.
The rules require a plan or issuer to give such eligible child an opportunity to enroll that continues for at least 30-days (including written notice of the oppotunity to enroll) regardless of whether the plan offers open enrollment and regardless of when any open enrollment period might otherwise occur.
The enrollment opportunity (including the written notice) must be provided not later than the first day of the plan year beginning on or after September 23, 2010. Thus, many plans can use their existing annual enrollment periods, which commonly begin and end before the start of a plan year, to satisfy the enrollment opportunity.
If the child is enrolled, coverage must begin not later than the first day of the first plan year beginning on or after September 23, 2010, even if the request for enrollment is made after the first day of the plan year. In subsequent years, dependent coverage may be elected for an eligble child in connection with normal enrollment opportunties under the plan.
Notice may be provided to an employee on behalf of the employee’s child and notice may be included with other enrollment materials, provided that the notice is prominent.
For a group health plan, if notice is provided to an employee whose child is entitled to an enrollment opportunity, the obligation to provide the notice to the child is satisfied for both the plan and the issuer.
Any child enrolling in group health coverage is to be treated as a special enrollee, as provided under HIPAA portability rules. Accordingly, the child must be offered all the benefits packages available to similarly situated individuals who did not lose coverage by reason of cessation of dependent status. The child also cannot be required to pay more for coverage than a similarly situated individual who did not lose coverage by reason of cessation of dependent status.
If a child qualifies for an enrollment opportunity and the parent is not enrolled but is otherwise eligible to enroll in the group plan, the plan must provide an opportunity to enroll the parent, in addition to the child.
If a plan has more than one benefits option, a child will be eligible for enrollment in any option, regardless of which option applies to the parent.
A parent must be given the opportunity to switch plans should the child enroll in an option to which the parent is not otherwise enrolled.
A child who qualifies for an enrollment opportunity who is covered under COBRA continuation must be given the opportunity to enroll as a dependent as an active employee, other than as a COBRA-qualified beneficiary. In this situation, if the child loses eligibility for coverage due to a qualifying event (including aging out of coverage at age 26), the child has another opportunity to elect COBRA continuation coverage. If the qualifying event is aging out, the COBRA continuation coverage could last 36 months from the loss of eligibility that relates to turning age 26.
A covered employee who has never enrolled a child because the child was too old under the terms of the plan but who has not yet turned 26, must be provided an opportunity to enroll the child though the child was not previuously covered by the plan. If the parent is no longer eligible for coverage (for example, the parent no longer works with the employer) as of the first date on which the enrollment opportunity would be required to be given, the plan would not be required to enrll the child.
Fact Sheet: http://www.dol.gov/ebsa/newsroom/fsdependentcoverage.html
