COBRA Articles
COBRA Quick Tips: Age 26 Rule
- The age 26 requirement was enacted on March 23 and applies for plan years beginning on or after Sept. 23. For practical purposes and calendar year plans, the requirement is effective Jan. 1, 2011. To keep things simple, we recommend that employers implement the age 26 rule with the plan year effective date.
- The requirement applies to medical plans that already offer dependent coverage. While most plans include dependent coverage, it is not required. Any eligible child can remain covered until age 26, even if the child is living away from home, is not a student or is working. As long as the adult child is under age 26 and a child of the participant, the health plan must offer coverage. The only limited exception is that grandfathered plans can exclude coverage for adult children until 2014 if the adult children are eligible to enroll in an employer-sponsored plan other than the plan of either parent. The law does not require plans to cover adult children’s spouses or children in a COBRA status.
- As before, a dependent child will qualify for COBRA benefits if he or she loses coverage under a parent's employer-sponsored insurance (20 employees or more) if the parent/employee:
Dies
Has reduced hours of employment
Loses his/her job for any reason other than his/her gross misconduct
Becomes enrolled in Medicare
Becomes divorced or legally separated
-
In addition, COBRA continuation coverage is available if the child stops being eligible for coverage under the plan as a "dependent child."
4. Make sure to alert employers of their new notification requirements. Employers must give children who qualify a 30-day opportunity to enroll. This enrollment opportunity and a written notice must be provided no later than the first day of the first plan or policy year beginning on or after Sept. 23. The Department of Labor provides the following model language to use in dependent notifications:
Individuals whose coverage ended, or who were denied coverage (or were not eligible for coverage) because the availability of dependent coverage of children ended before attainment of age 26, are eligible to enroll in [Insert name of group health plan or health insurance coverage]. Individuals may request enrollment for such children for 30 days from the date of notice. Enrollment will be effective retroactively to [insert date that is the first day of the first plan year beginning on or after Sept. 23]. For more information, contact the [insert plan administrator or issuer] at [insert contact information].
5. Adult children who previously fell off the COBRA plan because of loss of dependent status or other reasons need to be notified of the change and given the opportunity to re-enroll. Administrators should require a completed election form to allow an adult child to re-enroll in the plan.
6. To be prepared for questions during open enrollment and to ensure notification compliance, plan administrators need to consider that they may be enrolling young adults who dropped off the plan up to five years back. Be conscious of alternative coverage rules as they apply to this.
7. The period of coverage still varies according to the type of qualifying event as follows:
| Qualifying Event | Period of Coverage |
| Reduced hours | 18 months* |
| Terminated employment | 18 months* |
| Death | 36 months |
| Divorce or separation | 36 months |
| Medicare enrollment | 36 months |
| Loss of dependent status | 36 months |
*Source: www.dol.gov This 18-month period may be extended for all qualified beneficiaries if certain conditions are met in cases where a qualified beneficiary is determined to be disabled for purposes of COBRA.
8. When the adult children attain age 26 and lose coverage, they are subsequently entitled to 36 months of COBRA. For example, if a 25-year-old child is eligible for COBRA due to his mother’s employment termination, he can receive 18 months of coverage. However, on his 26th birthday just 12 months later, he has a second qualifying event – loss of dependent status. In this scenario, he becomes eligible for 36 months of coverage.
9. Any young adult who is a qualified beneficiary and whose parent is eligible for coverage, must be offered all of the benefit packages available to similarly situated individuals who did not lose coverage because of loss of dependent status. The qualified individual cannot be required to pay more for coverage than similarly situated individuals.
10. To avoid overpayment on the invoices, employers need to once again diligently reconcile participants and beneficiaries against their group bill(s).
Here’s wishing you a successful open enrollment and easy age 26 transition!
To learn more about the age 26 requirement and for more COBRA solution guidance, go to http://www.dol.gov/ebsa/faqs/faq-PPACA.html.
Have a question about our online COBRA administration system? Contact our sales team.
Categories
Learn More
Stay informed. Sign up to receive your free e-newsletter "COBRATalk."
Need help?