Turning 26 and Coverage On Parent’s Health Insurance

26th birthday

Background:

Under the Patient Protection and Affordable Care Act (ACA) plans and issuers that offer dependent child coverage must “continue to make such coverage available for an adult child until the child turns 26 years of age.” This requirement is regardless of the child’s dependent status, residency, student status, employment status or marital status.  This rule applies to all health plans in the individual market and to all employer health insurance plans. (29 CFR 2590.715-2714 – Eligibility of children until at least age 26.)

Termination of coverage:

The ACA requirement for adult coverage applies only until the date that child turns 26. However, some states have laws extending coverage through the end of the month the child turns 26, or until the end of the billing cycle or calendar year or possibly beyond age 26. Check with your carrier, or policy documents to verify when coverage for a child who turns age 26 ends.

COBRA:

In general, employees must notify the employer in writing within 60 days of their dependent turning 26. In turn, employers with 20 or more employees, must provide a notice of COBRA eligibility, enrollment forms, duration of coverage and terms of payment to the individuals who are no longer eligible for coverage as a dependent under their parents plan.  (Employers with 20 or fewer employees, may have similar obligation under State law e.g. Mini-Cobra, instead of under COBRA.)

Note:  

Most states have an exception to the limiting age for disabled children. For instance, for group policies issued in Texas, a child who is not capable of self-sustaining employment because of mental retardation or physical disability and who is chiefly dependent on their parents for support and maintenance must be allowed to remain on his or her parent’s insurance, without regard to age. The employee must provide to the insurer proof of the child’s incapacity and dependency:

(1)  not later than the 31st day after the date the child attains the limiting age;  and (2)  subsequently as the insurer requires, except that the insurer may not require proof more frequently than annually after the second anniversary of the date the child attains the limiting age.

(Sec. 1201.059. TERMINATION OF COVERAGE BASED ON AGE OF CHILD IN INDIVIDUAL, BLANKET, OR GROUP POLICY.)

Why does it matter?
  1. Financial benefit: Dependents represent a large portion of the cost of many employers’ health plans. Older children who have passed age 26 are often inadvertently included on an employee’s health plan because of a lack of understanding on the part of the employee or a lack of communication on the part of the employer, including not having a process to update the status of dependents.
  2. Rejected claims: Often, ineligibility isn’t determined until a dependent makes a very large claim, at which point the provider might deny coverage.

Ensuring dependents do not remain enrolled longer than they are eligible, protects not just the employer, but also the employee and his or her loved ones from future legal and financial risk.

What about the baby?

baby

Coverage of a newborn may be regulated by a combination of state, federal and carrier level regulations and rules.  Generally, in most states the state insurance law requires group health insurance policies (including HMOs) that provide maternity benefits to cover newborn children automatically for 30 or 31 days from birth.

For instance under Texas Insurance Code Sec. 1501.607 Coverage for Newborn Children:

(a) A large employer health benefit plan may not limit or exclude initial coverage of a newborn child of a covered employee.

(b) Coverage of a newborn child of a covered employee under this section ends on the 32nd day after the date of the child’s birth unless:

(1) children are eligible for coverage under the large employer health benefit plan; and
(2) not later than the 31st day after the date of birth, the large employer health benefit plan issuer receives:

(A) notice of the birth; and
(B) any required additional premium.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.

(The same is true for a small employer, see Sec. 1501.157 Coverage for Newborn Children)

When a group policy includes automatic newborn coverage in their plan design, if the parent is enrolled for his or her own coverage at the time of the birth, the newborn is automatically covered for the first month. (If both parents have group coverage that includes automatic newborn coverage, the two plans coordinate benefits for the baby based on the birthday rule; i.e., the plan of the parent whose month and day of birth comes earlier in the year covers the baby first, then the other parent’s plan pays remaining expenses, if any, as secondary coverage.)

To continue the child’s coverage beyond the first 30 or 31 days, the Health Insurance Portability and Accountability Act of 1996 (HIPAA)  special enrollment rules requires that the “plan must allow an individual a period of at least 30 days after the date of the” birth to enroll the child and coverage “must begin on the date of birth.”

When in doubt on how the rules work or apply specifically to a fully-insured plan, confirming with a carrier is the best place to start. If self-insured, checking one’s plan documents in the eligibility section under “dependent insurance”,  in my experience are where the rules for newborn coverage are located.

e.g.  newborn exception2

Dallas & San Antonio Paid Sick Leave Ordinance Scheduled to Take Effect 8/1/2019

texas3

Background

Texas does not have a statewide paid sick leave; however, paid sick leave ordinances in Dallas and San Antonio are scheduled to take effect on August 1, 2019.

NOTE: Austin’s paid sick leave ordinance, which was supposed to go into effect this past October, has been held unconstitutional by the Third Court of Appeals in Austin. The Third Court of Appeals decided that it violated the Texas Constitution because it was pre-empted by the Texas Minimum Wage Act. Given the similarities among the ordinances, the Texas Supreme Court’s decision on the Austin ordinance may impact the San Antonio and Dallas ordinances.

The 86th Texas Legislative Session failed to pass Senate Bill 2487, a seemingly well-supported bill to preempt all such ordinances from taking effect and being enforced. Without a Special Session, there is no other procedural method to revive the bill, and the Texas Legislature will not have an opportunity to address the sick leave preemption issue until the next session in January 2021.

High Level Key Points – for employers who have employees working in Dallas or San Antonio:

Effective dates:

  • August 1, 2019, for employers having more than five employees.
  • August 1, 2021 for employers with less than 5 employees.

Who is entitled?

  • Any employee (including part-time) who performed at least 80 hours of work for pay within the city in a year, including work performed through a temporary or employment agency.
  • Where the employee worked and for how many hours are the determining factors, regardless of whether the employer has a location within the city limits of Dallas or San Antonio.

What are qualified employees entitled to?

  • Employers with more than 15 employees – one hour of earned paid sick time for every 30 hours the employee worked in the city up to a yearly cap of 64 hours per employee per year.
  • Employers with less than 15 employees – one hour of earned paid sick time for every 30 hours the employee worked in the city for up to 48 hours per employee per year.

Notice requirements:

  • The employer must provide an employee at least a monthly statement showing the amount of the employee’s available earned paid sick time.
  • If an employer has an employee handbook, the ordinances require that the employer provide a statement of rights and remedies in the handbook.
  • The ordinances also require the display of a sign in a conspicuous place where other notices to employees are customarily posted.

What actions should an employer take?

Employers who already have a paid sick leave policy in effect that is the same as or more generous than these ordinances, (e.g. company’s policy already provides at least 64 hours (8 days) of paid time off to all employees (or 48 hours if  less than 15 employees) the Dallas and San Antonio ordinances both state that they do not require an employer to provide additional earned paid sick time. However, employers should consider developing procedures that will comply with the additional ordinance requirements (e.g. notice).

An employer who has more than five employees performing work in San Antonio and/or Dallas and does not currently have a paid sick leave policy that is compliant with these ordinances, should watch for continuing developments and start thinking about the necessary changes they need to make to their policies and practices in order to comply with these new rules by August 1.

References:

  1. City of Austin Sick Time Ordinance
  2. City Of San Antonio Paid Sick Leave
  3. Dallas Paid Sick Leave Ordinance