Adult Children Hot Topics & FAQs

• Under the special enrollment rules, must the plan allow other family members to enroll or only the adult child who had previously aged out of the plan?

  Answer The plan must provide all eligible family members an opportunity to enroll in the plan.

• May a plan’s eligibility requirements for children impose support, residency, student status, tax dependent status, or other restrictions on children’s eligibility?

  Answer Generally no – the only restriction that can be applied to children is the attainment of age 26. “Children” for purposes of this rule includes the employee’s sons, daughters, stepchildren, adopted children (including children placed for adoption), and foster children. Generally the only restriction an employer’s plan may impose on such children’s eligibility prior to turning age 26 is age. However, a plan may impose restrictions on other individuals. For example, the plan could require that an employee’s grandchild or niece must qualify as the employee’s tax dependent in order to be enrolled in the plan.

• Is the plan required to extend coverage to age 26 or to the end of the year in which the child turns age 26?

  Answer: To age 26. There are two separate Health Care Reform rules related to adult children: the coverage mandate and the tax change. Under the coverage mandate, a group health plan that covers children must offer coverage to any child up to age 26 for plan years beginning on or after September 23, 2010. In addition, Congress made a corresponding tax change so that employment-based health coverage for such children would be excluded from the employee’s income. That rule allows an employer to extend coverage for the child on a tax-advantaged basis through the end of the calendar year in which the child turns age 26. (For more information about the new tax rule for adult children, click here.)

  Putting the two rules together, for plan years beginning on or after September 23, 2010, an employer’s plan must cover adult children to age 26 and may cover children on a tax-free basis through the end of the year in which the child turns age 26. The health plan may provide coverage beyond the end of the year in which a child attains age 26 (and may be required to do so under state law), but the value of the child’s coverage would have to be imputed as income to the employee unless the child otherwise qualifies as a tax-dependent (perhaps because the child is disabled).

• Additional Resources

  • Notice Requirement

    Summary of the coverage for adult children notice requirements

  • Model Notice

    Model adult children’s coverage notice

  • Special Enrollment Rules

    Summary of the special enrollment rules for adult children and their families

  • Tax Treatment

    Summary of Health Care Reform tax rules for adult children