As a college student, I remember the stress felt both by my parents and by myself at having to find health insurance coverage after I had aged out of my parents’ health plan. Although the passing of the Affordable Care Act (ACA) and the age 26 mandate has eased the stress of finding health insurance for both adult children and their parents, there are still a number of questions parents are asking their employers about the mandate. We’ve put together a list of nine FAQs to help benefits professionals answer those questions.
Questions Employees Are Asking Their Benefits Department About the Age 26 Mandate:
1. What does the ACA shared responsibility mandate require?
It requires covering full-time employees and their dependents.
2. Who is considered a dependent?
For employer shared responsibility purposes, a dependent is an employee’s child who has not yet reached the age of 26. This includes biological and adopted children.
- A stepchild
- A foster child
- A child who is not a U.S. citizen or national and who does not reside in the U.S. or a country contiguous to the U.S.
- A spouse
Eligibility for coverage of children up to age 26 cannot be based on:
- Financial dependency
- Marital status
- Student status
- Employment status
3. When will my child be removed from my plan?
Large employers may not remove a child of a full-time employee from their plan anytime during the entire month in which the child turns the age of 26. The child can be removed the first day of the following month.
4. What are my child’s options for coverage?
Your child may have a variety of options to choose from to gain health insurance coverage, including:
- Short-term limited-duration health insurance (STLD). A temporary solution for those who lack coverage, SLTD is typically offered only for catastrophic events.
- Child’s or child’s spouse’s employee health plan. Losing health coverage under one plan is seen as a life event and may qualify your child for special enrollment in another plan. Special enrollment in another employer plan must be requested within 30 days of the date coverage was lost.
- COBRA from your employer plan. Your child may be required to pay the entire premium and administrative expenses up to 102% of the plan’s cost to your employer. Your child must notify your employer in writing within 60 days of the date his or her coverage ends. In turn, your plan will notify you of the right to extend your child’s coverage under COBRA. Watch for the election notice in the mail; you will only have 60 days from the date the notice was sent to take action.
- Individual coverage through an ACA exchange. Because aging out of your plan is a life event, your child is eligible to sign-up for exchange coverage during a special enrollment period. He or she has up to 60 days from the date when the life event occurred to apply for coverage.
- Low-income adults and pregnant women might be eligible for Medicaid. Eligibility varies by state. People can sign up year-round.
5. My child is married—Will you offer COBRA to his or her spouse?
No. A plan does not have to offer COBRA to the spouse of an employee’s child. Kaiser Family Foundation clarifies that the plan is only required to provide coverage to an employee’s children under the age of 26.
6. Will my child’s pregnancy be covered under the age 26 mandate?
If an employee is covered under a fully insured plan by a small employer, Lockton’s Rory Akers explains that the employee’s plan is required to provide coverage for the dependent child’s prenatal care and delivery as an essential health benefit.
If an employee is covered under a fully insured or self-funded group health plan offered by a large employer, the plan is only required by the ACA to cover those prenatal care services that are considered preventive for the dependent child, not labor and delivery.
Regardless of the employer size, a plan is not required to provide coverage for an employee’s grandchild.
Keep in mind that all fully insured plans must also follow their state insurance laws, even if they are more restrictive than federal laws.
Related Reading: Thought the ACA Individual Mandate Was History? Think Again!
7. Can a dental or vision plan cut off my child’s coverage before age 26?
Yes. If a dental or vision plan qualifies as an “excepted benefit” the dependent coverage mandate does not apply. The plan can use a different definition of dependent other than age 26 if it so chooses.
An “excepted benefit” is:
- A plan that is provided by a different carrier than the health plan
- Not an integral part of the health plan, i.e. the employee makes a separate election to enroll in the health plan and makes a separate premium payment for coverage
8. Can my child’s employer pay him or her an opt-out incentive to be a dependent on my plan?
Yes. Kaiser Health News reported that offering an opt-out incentive to a dependent to stay on his or her parents’ health plan is uncommon, but could become more prevalent in the future. The situation can be compared to those companies that apply a spousal surcharge to employee health plans. Experts said a company can provide an incentive to encourage those eligible for coverage to take coverage elsewhere, as long as it is clearly spelled out in the plan and applied uniformly.
9. Can I drop my child from my plan, or do I have to carry him or her until the age of 26?
While the employer plan is required to offer coverage to employees’ dependent children up to the age of 26, there is not a rule that requires employees to provide coverage for their dependents, Timothy Jost told Kaiser Health News.
Want to learn more about the age 26 mandate?
- Check out the International Foundation ACA University page on Dependent Coverage.
- Visit these additional resources:
- Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act, IRS (See Question 44)
- Young Adults and the Affordable Care Act FAQs, DOL (See Questions 4 & 14)
Amanda Wilke, CEBS
Information/Research Specialist at the International Foundation