Affordable Care Act of 2010 and Young Adults

For millions of Americans, the Affordable Care Act is a very timely and long-awaited action by our legislature.  The group that is, perhaps, the most greatly affected is young adults between the ages of 19 and 26.  Estimates by the U.S. Department of Health and Human Services are that 2.37 million will be impacted by this new reform, nearly two million of which are not currently insured.

Although just 17 percent of our overall population is made up of this segmented age group, they represent 30 percent of the total 46 million citizens under the age of 65 who are currently uninsured.  One of the obvious reasons for this lopsided statistic is that the unemployment rate for the age group 20-24 has risen over the past year to approximately 17.2 percent.  The other major contributor is that young adults are most frequently in employment situations where they are not afforded access to employer-based insurance, i.e. part-time jobs, entry-level jobs or jobs in small businesses.

Although many insurance plans made provisions to institute the new changes early in order to accommodate graduating students and avoid lapses in coverage between graduation and the Act’s September 23 effective date, if a plan did not offer that option, things are now in full swing.

To clarify, the definition of a “child” covered under this provision is:

“…an individual who is a son, daughter, stepson, or stepdaughter of the employee, and a child include both a legally-adopted individual of the employee and an individual who is lawfully placed with the employee for legal adoption by the employee. The term also includes an “eligible foster child” who has been placed with the employee by an authorized placement agency or by judgment, decree, or other order of any court.”

The Act requires coverage be offered for these adult children even if they no longer live with the parent, are not dependents on the parents’ tax returns or are not students.  The adult children can be married or unmarried.  If married, the coverage requirements do not extend to the spouses or children of the adult child.

Currently, the Affordable Care Act requires that an adult child take health insurance that is offered on his or her job instead of staying on a parent’s plan.  However, effective in 2014, it is the option of the adult child to stay on a parent’s plan until age 26, even if offered health insurance through a job.

A couple of other provisions of the Act are that self-insured health plans must also adhere to these requirements; and if a plan does not currently offer dependent coverage, it is not a stipulation that it do so.

In explanation of how enrollment should be handled, the following is taken from the White House Fact Sheet regarding this Act provision:

All Eligible Young Adults Will Have A Special Enrollment Opportunity

For plan or policy years beginning on or after September 23, 2010, plans and issuers must give children who qualify an opportunity to enroll that continues for at least 30 days regardless of whether the plan or coverage offers an open enrollment period. This enrollment opportunity and a written notice must be provided not later than the first day of the first plan or policy year beginning on or after September 23, 2010. The new policy does not otherwise change the enrollment period or start of the plan or policy year.

Another important point in the Act provision detailed in the fact sheet is:

The value of the employer-provided health coverage is excluded from the employee’s income for the entire taxable year in which the child turns 26. Thus, if a child turns 26 in March but stays on the plan through December 31st (the end of most people’s taxable year), all health benefits provided that year are excluded for income tax purposes.

If you  have other questions regarding this new Act and how it applies to adult children up to age 26, there is great information at these links:

United States Department of Labor FAQs

National Conference of State Legislatures Table of State Laws

The  Commonwealth Fund’s Brief – Rites of Passage: Young Adults and the Affordable Care Act of 2010