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Adopted Child Eligible for Coverage? Stop Loss Issues?


Guest GmcyWT

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Guest GmcyWT

Employee seeks to add a newly adopted child as an eligible child/dependent under the employee's employer-sponsored health coverage. While the plan covers "legally adopted" children, it is unclear whether the adoption is such that the child can be covered under the plan as an eligible child/dependent.

Facts

The child is a relative of the employee, and the adoption occurred outside the U.S. (in the home country of the child and other members of the employee's extended family). The child is now living with the employee in the U.S., and they are in the process of applying for a green card for the child. The child is also applying to attend college in the U.S.

The employee has not provided an adoption decree or other similar documentation of the non-U.S. adoption, and it is unclear whether the local (non-U.S.) adoption is recognized in the U.S. The employee is pursuing a visa that will allow the child to stay in the U.S. as the employee's child, but the employee has indicated that other avenues (e.g., international adoption process, temporary guardianship or kinship guardianship) will not be pursued.

Plan Provisions

The plan is an employer-sponsored group health plan (self-insured with stop loss), which covers eligible children through age 26. Eligible children include: (i) legally adopted children (from the earlier of the date the child is lawfully placed in the participant's household for adoption or the date of legal adoption), and (ii) any other unmarried children (e.g., grandchild, niece, nephew, etc.) living with a participant who can be claimed as dependents on the participant's tax return and for whom the participant is appointed legal guardian.

Issue/Questions

It is unclear whether the non-U.S. adoption constitutes a "legal adoption" for purposes of the plan. Even if the non-U.S. adoption were not a "legal adoption," it seems that the plan could cover the child if the child were "lawfully placed" in the employee's household for adoption (in anticipation of legal adoption). However, the employee does not intend to pursue further international adoption procedures. The employee is also reluctant to pursue legal guardianship that would qualify the child under clause (ii) above.

  • Does the plan run into any issues if it provides coverage on account of the child being "legally adopted" (albeit outside the U.S. and without confirmation of whether the adoption is recognized in the U.S.) or "lawfully placed" for adoption (although the employee is not presently pursuing further international adoption procedures)? For example, could this present any issues with respect to the stop loss carrier?

  • Under ERISA 609©, employer-sponsored group health plans are required to cover adopted children of plan participants under the same terms and conditions as apply to dependents who are natural children -- irrespective of whether the adoption has become final. The law protects children who are under 18 as of the date of adoption (or placement for adoption). Although the child is college-age and could very well be 18 or older, the plan covers eligible children through age 26. Even if the law protects only protects children adopted prior to age 18, doesn't it seem inconsistent with the intent/spirit of the law to treat adopted children age 18-26 (or, rather, children who were 18-26 at time of adoption/placement) differently from natural children age 18-26 (who would be covered under the plan)? This is probably moot as the plan covers all children 18-26. If this child cannot be covered under the plan, it will not be because the child is over 18 and not protected by ERISA 609© -- it will be because the child is not "legally adopted" and thus not an "eligible child" under the plan.

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