Interim Rule Released on Dependent Coverage Requirement
As reported by SIIA's Government Relations Staff, Federal agencies will be continually issuing regulations and notices of guidance pertaining to how provisions of the newly enacted Patient Protection and Affordable Care Act will be implemented. SIIA staff will develop summaries of these and distribute along with the full documents as soon as they are released.
Department of Labor Releases Interim Final Rules on Requirement of Extending Coverage to Child Dependents
The Department of Labor has released an interim rule on the newly enacted requirement for certain plans to extend dependent coverage to children up to the age of 26. Comments may be submitted for the next 60 days.
Dependent Coverage Requirement:
Any plan or issuer that makes available dependent coverage of children must make such coverage available for children until attainment of 26 years of age.
Final Interim Rule:
The proposed regulations clarify that, with respect to children who have not attained age 26, a plan or issuer may not define dependent for purposes of eligibility for dependent coverage of children other than in terms of the relationship between the child and the participant.
The following may not be used to define "dependent" for purposes of eligibility; financial dependency on the participant, residence with the participant, student status, marriage status, employment or eligibility for other coverage.
The terms of the plan for dependent coverage can not be based on age except for dependents age 26 or older. Surcharges for coverage of children under age 26 are not allowed except where the surcharges apply regardless of the age of the child (up to age 26) and that, for children under age 26, the plan cannot vary benefits based on the age of the child.
Employers may exclude from the employee's income the value of any employer provided health coverage for an employee's child for the entire taxable year the child turns 26 if the coverage continues until the end of that taxable year.
For plan years beginning before January 1, 2014, these interim final regulations provide that a grandfathered health plan that is a group health plan that makes available dependent coverage of children 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.
A plan must give a 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 opportunity (including the written notice) must be provided not later than the first day of the first plan year beginning on or after September 23, 2010.
Any child enrolling in group health plan coverage pursuant to this enrollment right must be treated as a special enrollee and must be offered all the benefit packages available to similarly situated individuals.
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How SIIA Intends to Educate its Members Further
Given the obvious importance of this new law, SIIA will be holding a series of one-day seminars to provide members with more in-depth information to help their businesses prepare for change. Click here for more details.