May 24, 2010

This installment of Hall Render's Health Law Broadcast series on health care reform is designed to provide you with the insight, analysis and practical suggestions with respect to the various reform initiatives that will affect your organization.

HEALTH CARE REFORM:  GROUP HEALTH PLAN COVERAGE OF ADULT CHILDREN

The IRS, the Employee Benefits Security Administration (EBSA) and the Secretary of Health and Human Services (HHS) have issued interim final regulations for group health plans and health insurance issuers relating to coverage of children to age 26.  Group health plans include both insured and self-insured group health plans. 

The Patient Protection and Affordable Care Act and its reconciliation-related amendments (referred to collectively as the "Act") states that if a group health plan provides coverage for dependent children, the plan must continue to make coverage available to an adult child until the child reaches age 26.  This provision is effective for plan years beginning on or after September 23, 2010 (January 1, 2011 for calendar year plans); however, for plan years prior to January 1, 2014, grandfathered plans can exclude a child who has other employer-sponsored health coverage. 

The interim regulations state that a group health plan can only define a dependent child by reference to the relationship between the child and the participant.  Group health plans can no longer impose additional criteria such as financial dependency, residency, student status, employment, eligibility for other coverage, or any combination of those factors.  In addition, group health plans cannot provide different benefits based on the age of the child or impose a surcharge on coverage for older children.

As stated above, for plan years that begin prior to January 1, 2014, grandfathered group health plans can exclude adult children who are eligible to enroll in an employer-sponsored health plan other than a group health plan of a parent.  An eligible employer-sponsored plan is defined as, with respect to an employee, a group health plan or group health insurance coverage offered by an employer to an employee which is a small or large group plan or a governmental plan.

A group health plan must offer a special enrollment period to a child whose coverage under the plan ended before the child reached age 26 or who was denied coverage or was not eligible for coverage under the plan because of age.  This enrollment period must last at least 30 days and must be provided no later than the first day of the first plan year beginning on or after September 23, 2010.  Many plans will be able to use their open enrollment period to satisfy this requirement.  If a child enrolls during this special enrollment period, coverage must begin no later than the first day of the first plan year beginning on or after September 23, 2010. 

These new requirements will require plan amendments.  As you review this information, please feel free to contact Tara Slone at (248) 457-7870 or your regular Hall Render attorney with any questions you may have.  We will issue additional Broadcasts as more guidance becomes available. 

Visit our Health Law Broadcast at hallrender.com/reform for a comprehensive listing of health care reform resources.  Also sign up for health care reform alerts and periodic updates as we continue to monitor this important issue.