Q: Will my benefits change if I add my adult child to my plan?
A: The majority of employees won’t see significant changes to their benefits packages, according to Steve Raetzman, a partner in consulting firm Mercer’s health and benefits consulting practice. However, some employers are expected to alter the way they share costs with employees as a direct response to this provision.
Q: What’s the likely charge for adding an adult child?
A: That will vary. But under the new law, young adults cannot be charged more than any other dependent. In a recent Mercer survey of nearly 800 employers, 20% said they’ll account for any additional costs by offering four or more rates based on how many dependents an employee chooses to cover, instead of the traditional two-tiered rates for employee-only and family coverage.
Under such a system, someone covering three children would likely pay more than a co-worker covering only two. Sixteen percent of employers surveyed said they plan to simply raise employee contributions for all dependents.
Q. Does the change apply to all health care benefits?
A: No. It’s important to note, Raetzman says, that the new law covers medical benefits and that coverage for other care, such as dental and vision, may not apply.
“You have to look closely for the eligibility of each benefit,” Raetzman says. “The official source of what you are entitled to is your employer’s plan.”
Q: What about pre-existing conditions?
A: Although the new health law prohibits insurers from denying children under the age of 19 coverage for pre-existing conditions, that doesn’t apply to young adult children applying for coverage in the private insurance market, who can be denied coverage for existing medical conditions or disabilities that require ongoing medical care, says Carrie McLean, consumer specialist at online broker eHealthInsurance.com.
Q: That doesn’t seem fair.
A: “People automatically assume insurance companies have to allow children back on their plan until age 26. They’ll allow them back on the plan only if they can pass medical underwriting,” McLean says. During medical underwriting, insurers review age, gender and health history before offering coverage. That exemption also expires in 2014.
Some young adults joining their parents’ employer-sponsored health plans can face a pre-existing condition exclusion for up to 12 months in which care for the existing illness is not covered. The rules vary by state. Once the exclusion period expires, the young adult will be covered for the illness.
Q: Can I find a better deal for my child if I decide to go outside my employer plan and get my adult child an individual policy?
A: If the cost of adding an adult child to your employer-based health plan seems high, parents can also explore options on the individual market.
EHealthInsurance evaluated more than 288,000 individual health insurance policies sold to consumers ages 18 to 24 and found that the average national monthly premium as of last February was $109 with a $2,651 deductible.
Parents who buy their family’s insurance on the individual market also may save money on their adult child’s coverage by purchasing a different plan tailored to that individual child’s needs instead of adding him or her to the family plan, McLean says.
Q: How do I sign my child up?
A: Insurers and employers are required by law to notify consumers about a special 30-day dependent open-enrollment period. It must begin no later than the first day of the plan year that starts after Thursday. Many employers will simply fold this into their annual open-enrollment period beginning in late fall for a benefit year that starts on Jan. 1, 2011.
Q: Are those the only dates to watch for?
A: July 1 is the second most common benefit start date, according to Raetzman. But a company can begin its plan year at any time, so it’s critical to check with your employer about when your child will be eligible for coverage.
In the individual market, the majority of policies start on Oct. 1. You’ll need to contact your insurer or agent to fill out the necessary forms.