Dependent Coverage EXTENDED to Age 26

Under federal health reform, an employee’s child can remain enrolled as a dependent until he or she reaches age 26. The new rule contains a number of sub-rules and nuances, as explained below. Federal tax changes allow tax-favored treatment of coverage costs until the child reaches age 27 (rather than age 26). New interim final regulations published May 10, 2010 require a 30-day election period following a special notice requirement. Practical implications and actions steps provided below will guide a group health plan sponsor’s reaction to this change in the law.

 The new rule only applies to a plan otherwise offering dependent child coverage. A plan that only provides employee-only, or employee and spouse only, coverage will not need to comply with the new rule.

Effective Date
The change is effective for a plan as of its first plan year on or after October 1, 2010. The effective date will correspond to a new plan year, which is also the date employees generally are allowed to re-enroll. (See below for the practical effect on the enrollment process just prior to the plan’s effective date.) The change for a plan with an October, November, or December plan year will be effective as of the first day of that month in 2010. Plans with plan years starting with January through September must comply with this change effective as of the first day of that month in 2011.  Coverage to Age 26 PDF Download