WASHINGTON—A provision in the new health care reform law that will extend group coverage to more adult children of employees is triggering confusion among employers and employees.

The provision will allow employees' children to continue coverage under their parents' plan until age 26, unless the child is eligible for coverage in another employer's plan. Then in 2014, the requirement will apply even if the adult child could receive coverage from his or her employer's plan.

That is a major change from the typical self-insured group plan design in which coverage of employees' children ends at age 19 or, if the child goes to college, at age 22 or 23. Some states have considerably longer coverage extension requirements—New Jersey's, for example, requires coverage until age 31—but those state laws apply only to insured plans.

The provision in the federal law that is intended to reduce the uninsured rate of young adults, the highest of any age group, has triggered a barrage of questions by employees of their employers, and employers are turning to their consultants and plan administrators in search of answers.

“Employers are being overwhelmed by questions. There is great confusion among employees,” said Randy Abbott, a senior consultant in the Wellesley Hills, Mass., office of Towers Watson & Co.

At a recent Towers Watson webinar for clients about health care reform, “Overwhelmingly,” the extension of coverage to young adult children “was the question of the day,” Mr. Abbott said.

Among the most frequently asked was, “When does the provision go into effect?”

“Many employees believe coverage starts now,” Mr. Abbott said of the requirement that goes into effect next year for most employers.

Right after the reform legislation passed, some employees contacted their employers' benefit call centers to try to immediately enroll their adult children in their employers' health care plan, said Christopher Renz, a partner with Mercer L.L.C. in San Francisco.

One possible explanation of confusion about the effective date is that misleading information has been spread by legislators, the media and even the nation's chief executive.

For example, during a speech this month in Portland, Maine, even President Barack Obama said the extension of coverage to adult children would start this year.

In fact, the effective date is the first day of the plan year that begins six months after the March 23 enactment of the law. Given that the vast majority of employer health care plans begin their plan years on Jan. 1, the requirement would not apply to most plans until Jan. 1, 2011.

Also contributing to the confusion was the unusual way the legislation was passed as well as 11th-hour changes. For example, under the main health care reform bill that Congress passed, the extension of coverage would not have applied if an employee's adult child were married.

But a budget reconciliation bill that Congress passed in addition to the main legislation made the marital status irrelevant in determining whether an adult child is eligible for coverage from a parent's employer-provided plan.

Yet another source of confusion, consultants say, is how long coverage must be extended due to wording of the law. While one part of the law says employers must extend coverage until an adult child's 26th birthday, coverage can be continued on a tax-favored basis for adult children through the end of the year in which the child turned 26.

The biggest reason for another wave of questions bombarding employers is enormous employee interest in the extension due to the recession and the nation's high unemployment rate.

When the economy was booming, students graduating from school often quickly found jobs and coverage under their employer's plan. Now, some new graduates have to wait a lot longer to be hired, leaving them exposed to medical bills when their coverage eligibility through a parent's plan runs out.

“In the current economic environment, parents are very anxious for their children to continue coverage,” said Michael Thompson, a principal with PricewaterhouseCoopers L.L.P. in New York.

When employees' children lose employer-paid coverage due to “age-out” stipulations, they can continue that coverage under COBRA, but they have to pay the full premium and coverage is limited to 18 months.

To ease employee confusion and provide accurate information, some employers are mailing notices and posting messages on corporate Web sites about highlights of the extension.

For example, the nation's largest employer—the U.S. government—last week informed employees via a Web posting and e-mail about key provisions of the age 26 coverage extension, including the Jan. 1, 2011, effective date. It also said additional information would be provided prior to November open enrollment when employees make their health care plan selections for the next year.

Consultants say providing information now, even in abbreviated form, will reduce confusion and the burden on corporate human resources departments.

“Be proactive. That is the smart thing to do. You minimize questions now and demonstrate to employees that you are on top of the issue,” Mr. Abbott said.

Adult child coverage

How the new health care coverage mandate for young adult children will work

■ Coverage must be extended to employees' adult children to age 26 unless he or she is eligible for coverage from another employer.

■ Beginning in 2014, coverage must be offered even if the adult child is eligible for other employer coverage.

■ The mandate is effective the first day of the plan year that starts six months after March 23.

■ Coverage must be extended even if the adult child is married.

■ Mandate applies to self-funded and insured plans, but states can impose more stringent requirements on insured plans.