Dependent Coverage

Many children with disabilities are covered under their parents’ health insurance plans as dependents.  One study found that over half of children with special needs were covered by employer sponsored insurance and about 30% were covered by Medicaid. Continuing to have access to insurance for children with disabilities is critical to maintaining good health given that many have secondary medical conditions requiring medication or other treatments. 

How does the law change dependent coverage?

Dependents will now be able to continue to be covered under their parents’ health insurance plans until they turn 26.

Why extend the age of dependent coverage?

Many young adults are uninsured.  They often do not have access to employer provided health insurance during the years they are transitioning to adulthood and starting jobs. This is especially true for young adults with disabilities.

Do employers have to provide family or dependent coverage?

No. But, if they do they offer dependent coverage, they must offer coverage to enrollees’ adult children until age 26.

Are all dependents eligible?

The term “dependent” is meant to be broad and include young adults even if the young adult no longer lives with his or her parents, is not a dependent on a parent’s tax return, or is no longer a student. It applies to both married and unmarried children. (although, if a dependent is married, their spouse or children would not be eligible for coverage).  Until 2014, if a dependent has other employer sponsored coverage the parent’s plan does not have to cover them.

Are any insurers implementing the dependent coverage changes early?

Yes. About 65 companies are offering coverage for young adults who age off their parents’ insurance before September or the plan year. Check with your insurance broker or your employer to see if your insurance company is offering early coverage.

How will I know how to enroll my dependent child who is under age 26?

Parents should watch for a notice from their insurance company or benefits administrator. Plans must provide both a notice of the benefit and at least a 30 day period to enroll.

Will all dependents under age 26 be treated the same?

Yes. For example, premiums and benefits for a 17-year old dependent would be no different than those for his 25-year old brother under their parents’ plan. The plan could not charge more for the same coverage or offer different plans for these dependents.

Are there any new tax benefits for dependent coverage through age 26?

Yes. The value of any employer-provided health coverage for an employee's child is excluded from the employee’s income through the end of the taxable year in which the child turns 26. This tax benefit applies regardless of whether the plan is required by law to extend health care coverage to the adult child or the plan voluntarily extends the coverage.