The Department of Labor ("DOL"), Department of Health and Human Services ("HHS") and Department of Treasury jointly issued interim final regulations ("Regulations") on the Patient Protection and Affordable Care Act's ("PPACA") provisions requiring that health insurance coverage be provided for adult children up to age 26. This provision of PPACA is applicable to plans as of the first day of the first plan year beginning on or after September 23, 2010, but plans and issuers may adopt the coverage mandate earlier.
There is no requirement for a group health plan or insurance issuer to provide coverage to dependent children; however, if a plan or issuer provides dependent coverage, PPACA requires that they offer this coverage to adult children up to age 26, regardless of their marital status. The Regulations make clear that plans and issuers may not use financial dependency, residency, student status, employment, eligibility for other coverage or any combination of these factors to determine whether an adult child is eligible for coverage. Rather, plans must base their determination on whether an adult child may be covered solely upon the adult child's age.
However, for plan years beginning before January 1, 2014, the Regulations state that a grandfathered health plan (defined as a plan that was in existence as of March 23, 2010) may exclude an adult child who has not attained age 26 from coverage only if the child is 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 to enroll in the group health plans of both parents, the Regulations provide that 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.
Additionally, the Regulations provide transitional relief to an adult child whose coverage ended, or who was denied coverage (or was not eligible for coverage) under a group health plan or insurance coverage because, under the terms of the plan or coverage, the availability of dependent coverage of children ended before age 26. The Regulations require a plan or issuer to give the adult child an opportunity to enroll that continues for at least 30 days (including written notice of the opportunity to enroll), regardless of whether the plan or coverage offers an open enrollment period and regardless of when any open enrollment period might otherwise occur. This enrollment period must be provided not later than the first day of the first plan year (in the individual market, the policy year) beginning on or after September 23, 2010 (January 1, 2011 for calendar-year plans). Under the Regulations, notice of this special enrollment period may be delivered to the employee on behalf of the employee's child and may be provided with other enrollment materials provided to employees, provided that the statement is prominent.
Plans and issuers will also have to extend the opportunity to enroll adult children in the plan to qualified beneficiaries under COBRA coverage. This means that if a former employee is on COBRA coverage, the former employee will have the right to add an adult child up to age 26, just like an active employee could.
If an adult child enrolls in the plan, even if the request for enrollment is made after the first day of the plan year, coverage must begin not later than the first day of the first plan year beginning on or after September 23, 2010 (January 1, 2011 for calendar-year plans). A copy of the Regulations may be found here.
Additionally, the DOL has released a fact sheet and a set of FAQs on the dependent care provisions of PPACA. The fact sheet may be found here. The FAQs may be found here.
Since the dependent care provisions of PPACA go into effect as of the first day of the first plan year beginning after September 23, 2010, plan sponsors should review this new guidance, familiarize themselves with the requirements discussed above and take appropriate action to amend their group health plans, if necessary. Additionally, plans that previously did not allow dependents to be enrolled in their group health plans up to age 26 need to determine which individuals must now be offered an opportunity to enroll in the plan. Plans will also need to remove references to Michelle's Law that may be included in their plan document, to the extent it no longer applies to the plan. Finally, plan sponsors should ensure that the proper enrollment opportunity notices are sent in accordance with the Regulations.