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Adult-children health coverage rules bar surcharge


WASHINGTON—Regulations issued Monday resolve numerous issues, including barring surcharges, for the requirement that employers extend health care coverage to employees’ adult children up to age 26.

That provision, part of the new health care reform law, goes into effect on Jan. 1, 2011, for calendar-year plans.

The rules issued Monday by the Department of Labor, the Department of Health and Human Services and the Internal Revenue Service say that employers will not be allowed to impose a special surcharge for extending coverage to young adults.

“That is big news,” said Andy Anderson, a partner with Morgan, Lewis & Bockius L.L.P. in Chicago. “Many people hoped you could charge more for adult children. The regulations very clearly say you cannot.”

The rules say that employees’ older children who previously were “aged out” of coverage from a parent’s plan now must be given a new right to enroll and at least 30 days to make their decision.

In addition, the regulations affirm that a child who previously lost coverage because of age and then opted for COBRA coverage can re-enroll in a parent’s heath care plan. Then, upon reaching age 26, the child could again take COBRA for up to 36 months.

Closely following the federal law, the regulations also say that coverage must be extended to employees’ adult children up to age 26 regardless of whether the child is in school, married, lives at home or has any income.

In a fine point, the regulations say that the last day a plan would have to extend coverage would be the day before the adult child’s 26th birthday. Under IRS regulations issued late last month, employers also can extend coverage until the end of the year in which the child turns 26 without any adverse tax consequences to the employee.

Most group plans now end coverage to employees’ children when they turn 18 or 19, or 22 or 23, if they are full-time college students.

The regulations are available at