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T.D. 9482, 05/10/2010 ; Reg. § 54.9815-2714T ; DOL Fact Sheet and FAQs: “Young Adults and the Affordable Care Act: Protecting Young Adults and Eliminating Burdens on Businesses and Families”


IRS has issued temporary regs on the rule in the Patient Protection and Affordable Care Act (Affordable Care Act) requiring group health plans and health insurance issuers that provide dependent coverage of children to continue to make such coverage available for an adult child until age 26.   A group health plan, or a health insurance issuer that offers (1) group health insurance coverage, and (2) dependent coverage of children, must make such coverage available for children until they reach age 26. (Reg § 54.9815-2714T(a))

For a child who has not attained age 26, a plan or issuer can't define who is a dependent eligible for dependent coverage of children other than in terms of a relationship between a child and the participant. Thus, for example, a plan or issuer can't deny or restrict coverage for a child under age 26 based on: the presence or absence of the child's financial dependency (upon the participant or any other person); residency with the participant or with any other person; student status; employment, or any combination of those factors. (Reg § 54.9815-2714T(b))

[Note: DOL's FAQs on “Young Adults and the Affordable Care Act: Protecting Young Adults and Eliminating Burdens on Businesses and Families” can be view on the DOL website at http://www.dol.gov/ebsa/newsroom/fsdependentcoverage.html.]

There is transitional relief for a child whose coverage ended under pre-Affordable Care Act rules, or who was denied coverage (or was not eligible for coverage) under a group health plan or health insurance coverage under these rules. A plan or issuer must give such children 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. (Reg § 54.9815-2714T(f))

Grandfathered group health plans: Group plans that were in existence on Mar. 23, 2010, may exclude adult children eligible to enroll in an employer-sponsored health plan (as defined in Code Sec. 5000A(f)(2) ), other than a group health plan of a parent. However, this exception does not apply for plan years beginning on or after Jan. 1, 2014. (Reg § 54.9815-2714T(f), T.D. 9482, 05/10/2010, DOL FAQ)

RIA observation: There's less than meets the eye in the new coverage requirement. Despite the apparently wide sweep of the new rule, the preamble to Treasury/DOL/HHS regs says that for a variety of reasons, of the 29.5 million young adults in the 19-25 age group, only 2.37 million might be affected.

Source: Federal Tax Updates on Checkpoint Newsstand tab 5/11/2010

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