HHS Releases Rules on Young Adults’ Health Coverage Under Reform
On Monday, the White House issued proposed rules for a provision in the new health reform law that allows young adults -- married or unmarried -- to remain on their parents' employer-sponsored plans or individual policies up to age 26, the New York Times reports.
Under the rules, health insurance companies must set the same premium rates for dependents of all ages up to age 26, regardless of whether they live with their parents, attend college or receive financial support from their parents.
Insurers would be in violation of the law if they levy a surcharge on premiums or set different terms of coverage for dependents ages 19 to 25, the White House said. The proposed rules also state that:
- Insurers and employers must provide dependents with a 30-day opportunity to enroll under their parents' policies; and
- Insurers must inform plan members that if their dependents lost coverage upon reaching a certain age, that they would once again be eligible for coverage starting on Jan. 1, 2011 (Pear, New York Times, 5/10).
The proposed rules, however, include an exception, according to the Washington Post. HHS in a statement said that the provision in the new reform law "applies only to health insurance plans that offer dependent coverage in the first place: while most insurers and employer-sponsored plans offer dependent coverage, there is no requirement to do so" (Hilzenrath, Washington Post, 5/11).
Possible Effect on Premiums
According to HHS' mid-range estimates on the new provision, premium rates for employer plans would rise by 0.7% in 2011 and affect as many as 1.2 million young adults (Alonso-Zaldivar, AP/San Francisco Chronicle, 5/10). HHS also estimated that:
- The average cost of coverage for each new enrollee in employer-sponsored plans would be about $3,380 in 2011, $3,500 in 2012 and $3,690 in 2013 (New York Times, 5/10); and
- For parents who purchase their insurance coverage directly from insurers, premiums would increase an estimated $2,360 in 2011 (AP/San Francisco Chronicle, 5/10).
Internal Revenue Service Commissioner Douglas Schulman said that coverage for workers' eligible dependents would generally be tax-free to the employee (New York Times, 5/10). Between 680,000 and 2.12 million young adults this year will choose to remain on their parents' insurance policies, according to HHS' estimates.
Although the provision is scheduled to take effect on Sept. 23, several large insurers voluntarily pledged to implement it ahead of schedule.
On Monday, HHS Secretary Kathleen Sebelius reported that 65 companies promised to comply with the provision as early as this month so that graduating college seniors have the option to remain on their parents' plans, the Wall Street Journal reports.
A spokesperson for America's Health Insurance Plans, the industry's main lobby group, said the association would delay comment while it reviews the proposal (Adamy, Wall Street Journal, 5/10).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.