Health Care Reform: Dependent Coverage for Children under age 27


The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively referred to as the “Act”), included a mandatory extension of coverage for employee’s children in plans that provide coverage for children. The Departments of Treasury, Labor and Health and Human Services (HHS) have recently issued several pieces of guidance that together provide employers with much needed direction on how to implement this new requirement.

Dependent Coverage Changes

Prior to the Act, employer-provided payments or reimbursements for the medical care expenses of an employee’s dependents were excluded from the employee’s gross income only if the dependents were tax dependents under Section 152 of the Internal Revenue Code. Under Code Section 152, generally children are dependents only if they are under the age of 19, or students under age 24, and only if they meet certain other conditions such as residency and financial support tests. Therefore, to avoid imputing income for employer-provided coverage many, if not most, plans that provide coverage for employees’ children limited such coverage to children that are Code Section 152 tax dependents.

Joint interim regulations released on May 10, 2010 by the Departments of Treasury, Labor and HHS address the Act’s general requirement that a group health plan or health insurer providing dependent coverage for children must, beginning with the plan’s first plan year beginning on and after September 23, 2010, make that coverage available for all children until age 26 regardless of whether the child is the employee’s Code Section 152 tax dependent.

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