One of health care reform’s more popular provisions guarantees people younger than 26 access to their parents’ dependent health coverage. Since that provision went into effect in September 2010, a lot of young adults have been hopping on board. According to a May 2011 Gallup poll, the uninsured rate among 18- to 26-year-olds dropped from 28 percent at the end of 2010 to 24 percent.
The new guaranteed dependent coverage provision has certainly played a role in this decline in the uninsured rate — but it’s not the only factor, according to Gallup. The Gallup poll shows that there’s been a 0.5 percent increase in employer-based coverage for the 18-26 age group and a 1.2 percent increase in health coverage administered by government programs.
On the other hand, early 2011 data suggest that the rate of new dependent coverage is outperforming government expectations. Kaiser Health News reports that at least 600,000 young people had already signed up for dependent coverage in just the first three months of 2011. The U.S/ Department of Health and Human Services previously forecast only 1.2 million new dependent coverage enrollees for the entire year.
But for young people and their families, there are still several questions that need to be answered to determine whether this new dependent coverage is accessible and right for them.
Who is eligible for dependent coverage?
Nearly all young people are eligible for this dependent coverage, including those who are married, have moved away from home or have graduated from college. According to the U.S. Department of Labor, however, health plans that were already in existence on March 23, 2010, do not have to provide dependent coverage for young people who are eligible for their own employer-based health coverage. But even this exemption expires in 2014, when young people will have the option to get health insurance through a parent’s plan or on their own.
Another important exception involves health plans that do not include dependent coverage. In other words, the new guarantee extends dependent coverage to dependents under age 26; it does not require health plans to include dependent coverage in the first place, although most group health plans do include this coverage.
Yet another exception involves pre-existing conditions. According to the Kaiser Family Foundation, a parent’s insurer still may deny benefits for pre-existing conditions until 2014. This exclusion for a pre-existing condition may last for up to 12 months applies only if the young person has gone without health coverage for more than 63 days.
What will dependent plans cover?
The health care reform law does more than just guarantee access to health coverage for young people; it also requires insurers to provide uniform cost and benefit packages for all dependent coverage. In other words, not only must insurers cover young people under their parents’ health plans until age 26, but they are not allowed to charge more than they do for other, younger dependents. Plus, this expanded dependent coverage won’t cost parents more at tax time. The value of dependent coverage is not part of an employee’s taxable income.
What if my state’s laws are different?
Before this provision of health care reform went into effect, states had an array of laws regarding health insurance coverage for young adults, according to the Kaiser Family Foundation. New Jersey, for example, guaranteed dependent coverage until age 30, while other states kicked young adults off their parents’ plans after they graduated from college.
The health care reform law pre-empts the more restrictive state laws but does not change the less restrictive ones. For example, young adults in New Jersey still can remain covered until 30, but those in more restrictive states can remain covered until age 26, despite what their state’s laws say.