Young Adults and the Affordable Care Act: What Are the Options for Coverage?

Prior to implementation of the Affordable Care Act (ACA) in 2010, adult children could be removed from their parents’ group health insurance plans upon reaching majority. Today, large group health plans are required to offer coverage to adult children until they reach the age of 26. The dependent coverage mandate includes biological and adopted children only, and does not apply to dental or vision plans.

Large group plans must offer coverage to full-time employees and their eligible dependents, regardless of whether the adult child lives with the parent, is financially dependent on the parent, has other coverage options, is a student or is married. While the ACA does not require small group health plans to offer dependent coverage, most do.

Group health plans are not required to extend coverage to an adult dependent’s spouse or children. In addition, if the adult dependent is pregnant, coverage must be offered for prenatal services as an essential health benefit, but not for labor and delivery.

Losing coverage on a parent’s plan is considered a qualifying event that triggers a special open enrollment period for individual health insurance or the dependent’s employer group health insurance plan. A person has 60 days from his or her 26th birthday to enroll in a new individual plan or 30 days to enroll in their employer’s group plan.

During this open enrollment window, one option is to apply for COBRA on the parent’s employer plan. An adult child may be eligible for COBRA for up to 18 months (certain qualifying events may extend coverage to a maximum of 36 months) and is responsible for full cost of the coverage. In addition, a person may shop for coverage on the private health insurance exchange or apply for short-term catastrophic individual plans.

Here are a few of the most frequently asked questions posed to employers about the mandate.

Who is considered a dependent?
A dependent is an employee’s child who has not yet reached the age of 26. This includes biological and adopted children, but does not include a stepchild, foster child, or child who is not a U.S. citizen and does not reside in the U.S. or a country contiguous to the U.S.

When will my child be removed from my plan?
An adult child can be removed from a parent’s plan the first day of the month following his or her 26th birthday.

Can a parent drop a child from a plan before he or she reaches the age of 26?
Yes, there is no requirement for employees to provide coverage for their dependents.

For more information, visit the U.S. Dept. of Health & Human Services.

Pacific Federal is a subsidiary of Zenith American Solutions.