“Dependent” children do not have to be financially dependent to be enrolled in health insurance

Be careful of the word “dependent.”

By now we all know that health care reform changed the rules related to covering children under health insurance and health benefit plans. The regulations issued for this part of the health care reform law make it clear that all children under age 26 must be treated the same. That includes the fact that such children are not required to be financially dependent on the insured parent.

Even given this significant change, the term “dependent child” is still in common use and is still included in most employer plans.

“Dependent” may apply generically in terms of a child being dependent for food, clothing, supervision and the like, but the traditional definition has relied on IRS rules.

Employers may want to adjust plan and other benefit communication language as soon as possible to avoid confusion.

According to Bill Kerrigan, Managing Principal Triniti Consulting Group, LLC

“Employers should ensure that the eligibility definition for dependents matches the actual enrollment practice of the plan.  Furthermore, employers with the extension of coverage for age 26 dependents and the associated additional plan costs, generally ranging from 1 to 3 percent, may need to revisit their traditional contribution and cost-sharing strategies to mitigate further cost shifting onto their programs.”

Parents should be aware of the rules to maximize potential coverage. Your child does not have to be financially dependent on you, may be married, is not required to live in your home and beginning in 2014 may not be considered ineligible for coverage even if employed with other employer-provided coverage.