Health Care Reform Expands Availability of Insurance for Young Adults

One large group of uninsureds and underinsureds has been recent high school and college graduates, and those who have been excluded from a family’s coverage due to being over a specified age (such as 19, or up to 25 if a tax dependent in college).

The Health Care Reform Act has clearly addressed that problem.

All children, whether a parent’s tax dependent or not, must be offered coverage up to turning age 26 (age 28 in Ohio) if the plan (individual or group) offers coverage to an insured’s children at all.

Any plans that have an anniversary date after September 23, 2010 must include this coverage (including so-called "grandfathered plans" that were in effect on March 23, 2010).

Here in summary are some features and considerations:

"Dependent" for the purposes of offering this coverage has little to do with income tax dependency.

The Health Care Act requirement applies to children (including adopted) and step-children, whether they are married or not, and even if they are independently living and have a solid source of income.

It does not apply to spouses of children, or children of children. Children are eligible for coverage even if they have other coverage (such as through their own employers) with the exception of grandfathered plans, where insurers can impose a choice-of-coverage requirement.

The premium payment for this new insurance (if employer paid, for example) is not taxable income to the recipient of the benefit.

Child coverage must be offered only if coverage is offered for children under the plan.

There is no requirement that coverage be paid for by an employer. Rates and terms of coverage cannot be discriminatory by age (cannot have one premium or set of coverages for those under 19 and another for those over, for example).

All plans must have at least a 30 day enrollment period for children benefiting from this new law, beginning the first day of the new plan year following September 23, 2010 (most will be January 1, 2011). This open enrollment can run along with the normal plan enrollment period, but is longer than many normal enrollment periods. Insureds (employees in group plans, and individual insureds) must be given written advance notice of this enrollment period.

Some progressive insurance carriers (Anthem, for example) have made the new continued coverage available as of July 1 or earlier, to comply with various state laws (Ohio) and for the convenience of their customers, so their young adult children can enjoy continued coverage without having to undergo reapplication. Check with your insurance broker or carrier if you or your child might benefit.

This extension of availability of coverage applies to children of those on COBRA.

Alan Wenger can be reached at awenger@hhmlaw.com or at (330) 744-1111.