Health care reform: Age 26 dependents—What’s the right message?

Well into college graduation season, the commencement speech may not be the hottest conversation topic. Instead, graduates and their parents may be talking about the new health care bill—and whether or not the children will lose their parents’ health care coverage at commencement or if they can take advantage of new rules that require employers to cover dependents up through age 26.

You need to get out in front of this message—in a hurry. Before your call center or HR generalists say conflicting things to employees.

What’s the law say about eligibility?

The interim final regulations have been issued by the Department of Labor, providing clarification on what employers and employees should expect:

• The definition of an eligible dependent will now include adult dependent children up to age 26. Further, adult dependents do not need to be enrolled in school; they can be married; and they do not need to be financially dependent on their parents. If adult children have a job with employer-sponsored coverage, then he or she is not eligible for their parent’s plan.
• While eligibility is extended to adult children of employees, it is not extended to the spouse or children of the adult child.
• All dependents, including those previously dropped from coverage and dependents of parents who’ve opted out of their employer’s plan, must be invited back during your enrollment period in writing.

Get your planning started now!

As your benefits team crunches the numbers on what this influx of new participants might mean for overall plan costs, you can begin to answer the barrage of questions that’s coming your way soon! You can also help prepare your administrator or HR team—anyone who is fielding questions about your benefits.

• Get talking points to your call center. You want consistent answers to eligibility questions. Now that the final regulations have been issued, don’t wait to get two or three key points into their hands. Here are a few to get you started. See the paragraphs below.
• Draft the new definition of an eligible child. The new language will have lots of homes—in your enrollment communication, your benefits website, your SPDs and possibly your employer handbook.
• Update your enrollment key messages. The regulations require that you prominently announce dependent eligibility up to age 26.
• Post a blog about your plans in advance. You can save your call center a lot of hassle if you proactively communicate the regulations and your approach to them well before the enrollment process.
• Take a time out on any dependent audit process.Many employers have made a concerted effort to randomly or fully audit the eligibility of the dependents on their plans. You’ll need to comb through all the forms and notices to ensure that they’re updated appropriately.
• Re-examine your annual student certification process. If you’re like most large employers, you request verification of a dependent’s student status prior to your fall enrollment period. You’ll need to comb through all the forms and notices to ensure that they’re updated appropriately.

What if your plan year starts mid-year?

In theory, you have more time to figure things out. The law states that employers with plan years that begin on or after September 23, 2010 must comply with the new eligibility rules. That means, if your plan has a July 1 plan year, you can wait until your spring enrollment in 2011 to officially invite dependents onto your plan. Good news? Maybe. When fall enrollment begins for the majority of large employers, you’ll need to be ready for questions about when you’ll accept older kids onto your plan. And, you may already be feeling pressure to add older kids on sooner, based on media coverage and what your peer companies are doing. Check back soon to see a list of frequently asked questions—sample responses to the most common questions you’ll receive.

Talking points for employees on new dependent eligibility rules

• The eligibility rules for children are changing, based on the new health care reform signed into law in March 2010. The massive health care legislation includes many provisions—some that impact health plans like ours and some that impact other parts of the health care system, including Medicare and individual health insurance policies. This provision is one of the first that impacts our plan.
• Your children, up to age 26, will be eligible as of January 1, 2011. [Alter if your plan year isn’t January 1.] Based on the new legislation, your biological or legally adopted children up to age 26 are eligible for our plan as of January 1, 2011. We’ll provide additional detail about eligibility rules on this date. .
• During our annual enrollment period this fall, you’ll have the chance to enroll your child when you enroll yourself. Every fall, you have the chance to review your health plan options and make any changes you wish—including adding or dropping eligible family members. At enrollment, you will also be able to enroll dependents who lost eligibility because their full-time status or age changed. [Insert details about typical proof of eligibility documentation required at enrollment—or if not, remind employees about the repercussions for enrolling ineligible dependents]

Final issue: how will this actually be administered?

We are curious how employers will administer the enrollment process of these new dependents. What forms will be required at enrollment to prove that adult children meet the new eligibility rules? As dependent audits have proved, not everyone understands them. Yet, like dependent audits, employers will most likely put the burden of proof onto employees. Clearly communicating the administration process will be critical to success and we’ll need to wait and see what those new administration rules require.

Other resources:

• Brief created by Kaiser Family Foundation
• Fact Sheet issued by the Department of Health and Human Services
• Final Interim Regulations issued by the Department of Labor
• FAQs written by the Employee Benefits Security Administration

We’re focused on PPACA

We’re continuing to watch for final regulations and helping you interpret them. We’ll be updating this blog with suggestions, tips and more sample language. If you have specific questions or would like help creating a long-term strategy, please give us a call!