On Monday, May 10, 2010, the Departments of Labor, Treasury and Health and Human Services issued interim final regulations implementing the requirements under the Patient Protection and Affordable Care Act (“PPACA”) that required group health plans and insurance issuers provide dependent coverage for children until they have attained age 26. The regulations are effective for plan or policy years beginning on or after September 23, 2010.
Currently, many group health plans limit dependent eligibility to age 19 or age 23 if the dependent is a full-time student. However, under the recently issued interim final regulations, plans now must cover dependents until age 26. Plans can no longer use financial dependence on the participant, residency with the participant, student status, employment, eligibility for other coverage or any combination of the factors to deny dependent coverage. In addition, a plan or issuer may not limit dependent coverage based on whether the child is married. However, a plan or issuer is not required to cover the spouse or children of an eligible dependent.
Additionally, for plan or policy years beginning on or after September 23, 2010, group health plans and insurance issuers must provide and announce a special 30-day enrollment period for dependent children under the age of 26 who may have lost eligibility prior to age 26. In announcing the special enrollment period, plans must provide a written notice which includes a statement that dependents whose coverage ended or who were denied coverage because the availability of coverage ended prior to age 26 are now eligible to enroll for coverage. The written notice may be provided to the employee or included with other annual enrollment materials that the plan provides as long as the statement is prominent. Further, a dependent enrolling under this special enrollment period (1) must be offered the same benefits package(s) available to other similarly situated dependents (who did not lose coverage) and (2) cannot be required to pay more for the coverage.
Because this special enrollment opportunity (as announced by the written notice) must be provided no later than the first day of the plan year beginning on or after September 23, 2010, many employers with a calendaryear plan can use their existing annual enrollment periods to satisfy the special 30-day enrollment period. However, coverage for these dependents must be made effective no 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.
Although the requirement to cover dependents until the age 26 does not take effect until the first plan year beginning on or after September 23, 2010, the DOL has reported that over 65 insurance companies have already voluntarily agreed to continue providing coverage for those dependents who may soon be graduating from college or age off of their parents coverage before the required special enrollment opportunity. As a result, we recommend that all employers confer with their group health plans and insurance issuers about providing this stop-gap coverage and the proper implementation of the age 26 requirements. Employers in Illinois should note that a state law was enacted last year that requires coverage for qualifying dependents up to age 26 and up to age 30 for military veteran dependents. Should you have any questions on these regulations or the Illinois law, please consult with your relationship attorney.