The Departments of Health and Human Services, Labor, and Treasury issued rules implementing the portion of the Affordable Care Act that expands dependent coverage for adult children to age 26.  Self-insured group health plans must comply with the rules as of the first plan year beginning on or after September 23, 2010 (January 1, 2011 for calendar year plans). 

Key Elements

Key elements of the rules are as follows:

·         Expanded Coverage Requirement

Plans that make dependent coverage available for children must continue to make coverage available to such children until the attainment of age 26.  The new requirement applies even if a young adult no longer lives with his or her parents, is not a dependent on a parent’s tax return, is no longer a student, or is married.  Any dependents (spouse and child(ren)) of the young adult do not qualify. 

For plan years beginning before January 1, 2014, a “grandfathered” group health plan (one existing on March 23, 2010) may exclude adult children who have not attained age 26 from coverage if the children are eligible to enroll in an employer-sponsored health plan other than a group health plan of a parent.  In the case of an adult child who is eligible for coverage under the plans of the employers of both parents, neither plan may exclude the adult child from coverage based on the fact that the adult child is eligible to enroll in the plan of the other parent’s employer.

·         New Enrollment Opportunities

Eligible children terminated from coverage due to failure to satisfy dependent criteria must be given a new opportunity to enroll.  An enrollment opportunity must be granted to the parent, in addition to the eligible child, if the parent is eligible but not enrolled for plan coverage.  A child on COBRA who qualifies for the new enrollment opportunity must be given the option of enrolling as a dependent of the active employee.  Children under age 26 who never enrolled because they were too old under the terms of the plan must be given the opportunity to enroll.

The enrollment period must continue for at least 30 days regardless of whether the plan offers an open enrollment period and regardless of when any open enrollment period might otherwise occur.  This enrollment opportunity must be provided not later than the first day of the first plan year beginning on or after September 23, 2010.  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. 

Written notice of the new enrollment opportunity must be provided not later than the first day of the first plan year beginning on or after September 23, 2010.  The notice must include a statement that children whose coverage ended, or who were denied coverage (or were not eligible for coverage), because the availability of dependent coverage of children ended before attainment of age 26 are eligible to enroll in the plan.  The notice may be provided to an employee on behalf of the employee’s child. In addition, the notice may be included with other enrollment materials that a plan distributes to employees, provided the statement is prominent.

·         Same Benefits/Same Price

Any child enrolling in group health plan coverage pursuant to this enrollment right must be treated as a special enrollee, as provided under the regulations interpreting the portability provisions of HIPAA.  Accordingly, the child must be offered all the benefit 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 similarly situated individuals who did not lose coverage by reason of cessation of dependent status.

Action Items

Timely compliance is essential.  Employers should begin reviewing and revising, as necessary, plan administrative procedures, plan documents, summary plan descriptions, enrollment materials, and other employee communications.  Revised enrollment materials must include the required written notice of the new enrollment opportunity afforded by the rules expanding coverage for dependent children.