The Department of Labor has issued interim final regulations (pdf) implementing the dependent coverage provisions of the Patient Protection and Affordable Care Act, as amended by the Healthcare and Education Reconciliation Act (PPACA)(the dependent coverage provisions are contained in ERISA section 715).

The new regulations provide that effective for plan years beginning on or after September 23, 2010 (effective date), any group health plan or group health insurance issuer (plan), which provides coverage to dependent children must make coverage available to dependent children until they have attained the age of 26.  The regulation confirms that the last required coverage date is the day before the child's 26th birthday. 

Prior to the child's 26th birthday, the plan may not restrict coverage of children based on financial dependency, residency, student status, employment status, or any combination of those factors, nor may plans vary the level or terms of coverage based on age until the child reaches age 26, if the plan provides coverage after that date.  For example, the plan may not charge a higher premium, or limit children of a certain age to a specific benefit option, such as an HMO, based on any age below age 26.

The regulation provides a transitional rule for children who lost coverage, were never eligible, or who never enrolled for coverage, and were not eligible under the plan's existing age limits as of the effective date.  For these dependent children, if the child is under age 26 on the effective date, the child is effectively treated as a new dependent under the HIPAA special enrollment rules, and must be provided with a special notice of enrollment rights on or before the effective date, and 30 days to enroll retroactively to the effective date.  To comply with the new requirements by the effective date, sponsors and administrators of plans covered under the new rule should begin planning now to draft the notice and identify dependent children who must be given the notice.

The new dependent child coverage rules do apply to "grandfathered' plans (generally a plan in existence on March 23, 2010, under new regulations to be issued) effective for plan years beginning on or after September 23. 2010.  However, with respect to grandfathered group health plans for plan years beginning before January 1, 2014, the plan may exclude an adult child below age 26 from coverage if the child is eligible to enroll in an employer-sponsored health plan other than the group health plan of a parent.

Russell D. Chapman authored this entry.