Health care reform required health plans that offered dependent coverage to extend coverage to all young adults up to age 26. Approximately 30 percent of young adults between the ages of 19 and 29 have no health insurance coverage. This young adult expansion of eligibility was an effort to make health insurance coverage more accessible to these young adults. However, what is not discussed is that this new right of young adults to be on their parents’ health plan appears to be independent of their parents’ discretion to prevent their child’s enrollment. Department of Labor’s FAQ on the issue is subtle:
“Q: What happens if a young adult under the age of 26 is not eligible for employer-sponsored insurance and both parents have separate plans that offer dependent coverage?
A: Neither parent’s plan can deny coverage.”
Some parents may not want junior on their health plan beyond a certain age, however, the government may have removed the parent’s discretion on the matter.
The other issue more frequently discussed is when does or should coverage end of the young adult? When they turn age 26? Up until the end of the tax year they turn 26? Or only until the turn age 27 do they become officially ineligible? These are all very good questions and extremely confusing. PPACA only stipulated that coverage had to continue to be offered to dependent children up to age 26. However, employers and insurance companies may wish to extend coverage beyond age 26 or at least until the end of the year in which the young adult turns 26. This is permissible and apparently without tax consequence pursuant to IRS notice 2010-30 as long as this child has not obtain the age of 27 by the end of the taxable year. Check with your insurer and qualified tax advisor for how this new law could affect your situation.