“Michelle’s Law” provides up to one year of extended medical coverage to seriously ill college students who would otherwise lose coverage due to a medically necessary leave from college. The law was named after a deceased college student who, despite suffering from colon cancer, did not take a medically necessary leave from college to avoid losing health insurance benefits under her parent’s group insurance plan. Prior to the law’s passage, a dependent child over age 18 could only be covered under his or her parent’s group health insurance if he or she was enrolled as a full-time student in a post-secondary educational institution.
For Michelle’s Law to apply, the dependent child must be enrolled in the group benefit plan as a full-time student until the first day of the medically necessary leave. The child’s treating physician must provide certification to the group health plan confirming that the illness or injury is serious and that the leave is medical necessary. The health plan may not terminate the coverage of the child on leave before the earlier of one year from the date of the medically necessary leave or the date when coverage would otherwise terminate. Additionally, the child on leave is entitled to the same coverage as are children who are enrolled as full-time students. Michelle’s Law does not specify how it interacts with COBRA. It appears that COBRA coverage would not be triggered until the end of the extended coverage period under Michelle’s Law.
The interplay of Michelle’s Law and Internal Revenue Code § 152 could result in a situation in which a college student is eligible for extended coverage but such coverage is not available on a tax-free basis. For example, if a college student who is 24 years old takes a medical leave but does not receive over one-half of her financial support from her parents, her extended medical coverage under Michelle’s Law may not be provided on a tax-free basis. The employer in such case will have to impute income based on the fair market value of the extended coverage.
The law is effective for plan years beginning after October 9, 2009 (January 1, 2010, for calendar year plans) for group health benefit plans subject to ERISA, and the Internal Revenue Code.
Action Required Plan
Sponsors should determine whether their group health plan extends benefits to dependent children and, if so, whether such coverage is contingent on full-time student status. If not, no action is required. Otherwise, Michelle’s Law will require action to amend plan documents, summary plan descriptions and enrollment materials to extend coverage to dependent college students. Plan sponsors must provide notification to participants of this change, including a description of the benefits of Michelle’s Law and the requirement to obtain physician certification of medical necessity. Finally, plan sponsors should implement a process to track whether extended coverage for college students may be provided on a tax-free basis.