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to Manage Benefits

Department of Labor Sheds Light on Extending Healthcare Benefits to Young Adults

Department of Labor Sheds Light on Extending Healthcare Benefits to Young Adults.As part of the comprehensive healthcare reform bill or the Patient Protection and Affordable Care Act (the Act) passed this past March, Congress included a provision that extended healthcare coverage up to age 26 to the adult children of insured individuals. The provision went into effect on April 27, 2010 and immediately enabled insured parents to take advantage of the benefit.

Specifically, the Act:

  • Allows healthcare coverage to be extended to employees’ children through the end of the taxable year in which they turn 26.
  • Also includes adult children of self-employed individuals.
  • Supersedes the previous age limit and also replaces the need for covered children to qualify asdependents in order to receive the tax benefit.
  • Empowers employers with cafeteria plans to immediately enable employees to make pre-tax salary reducing contributions to provide health coverage for children in this extended age range.  Plan sponsors must amend the language of their cafeteria plans by December 31, 2010 to include coverage for children under 27.
  • Requires all plans that provide dependent coverage of children to extend the age limit to 26 and stipulates that the change extending the date must be in place no later than for all plan years starting September 23, 2010 or later.

For your convenience, links to the relevant Department of Labor documents have been provided below.

In order to ensure compliance with the Act, and synchronization with your COBRA coverage, we will need you to notify us immediately if you plan to make this change prior to December 31, 2010 or if you are already allowing continued coverage to dependents that would have terminated this calendar year due to the previous age limit.