Sunday, May 16, 2010

Interim final rule released on provision extending dependent coverage to age 26

On May 10, the Internal Revenue Service (IRS), Department of Labor (DOL) and Department of Health and Human Services (HHS) released an interim final rule on the dependent child coverage extension requirement in the Patient Protection and Affordable Care Act (PPACA).

The regulations were published in the Federal Register May 13, 2010 and are effective for plan years beginning on or after September 23, 2010.

Specifications of the Rule
• The following factors may not be used in defining “dependent” for purposes of eligibility under age 26: financial dependency, residency, student status, employment, eligibility for other coverage, or any combination of these factors
• Plans and insurers are not required to cover the children or spouse of an adult child
• Plans cannot vary benefits or cost based on the age of the child, except with respect to children who are age 26 or older
• Plans can charge more for each individual added to the plan as long as the charge is uniform and does not vary based on the dependent’s age
• Plans are required to provide newly eligible children a special 30-day enrollment period and must provide written notice of the opportunity to enroll
• Notice of this enrollment right may be provided to an employee on behalf of the employee’s child and can be provided with other enrollment materials
• Coverage for children enrolling under the special enrollment rules must take effect no later than the first day of the plan year for which the requirement is effective
• The mandate to cover dependent children up to age 26 must be extended to qualified beneficiaries under COBRA coverage as well
• If state laws impose stricter requirements than those imposed by the PPACA, the state laws are not preempted

Guidelines specific to grandfathered plans
• Grandfathered health plans may exclude an adult child for plan years beginning before 2014 if the adult child is eligible to enroll in an employer-sponsored health plan other than a group health plan of a parent
• For plan years beginning after 2014, a grandfathered health plan may not exclude an adult child, even if they have access to other employer-sponsored coverage

Areas needing further guidance
• The regulations do not include a definition of a “child” (such as the tax exclusion guidance in Notice 2010-38, which defines a “child” as son, daughter, stepchild, adopted child or foster child)
• It is unclear whether a child under age 26 who is receiving COBRA coverage under a former employer’s plan or a spouse’s employer’s plan must be given an enrollment opportunity under a grandfathered plan prior to plan years beginning in 2014

For more information, click to access the following Fact Sheet and FAQs from the US Department of Labor.

1 comment:

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