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Dropping Coverage for Adult Children


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A self-funded health plan has been properly modified to extend coverage of adult children to age 26. The plan uses a composite rate for coverage, so once an employee gains eligibility the cost is the same for single, two-person or family coverage.

Recently an employee asked to drop coverage for a deadbeat adult child.

Are there any ramifications to the plan to honor this request? A plan amendment would likely be needed to clarify that the parent has this right, but are there any other pitfalls for consideration?

In the past we have denied similar requests for minor children (b/c the parents wanted to keep them on CHIP).

Thanks.

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What does the plan document say?

If the participant's quasi-premium does not vary with the existence or non-existence of a beneficiary beyond the participant, is it possible that there is no election for the participant to make?

If it's about amending the plan, why would the employer want to do that (assuming it had been satisfied with the plan's design)?

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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The employee is concerned about hospitals and providers pursuing him for claims that may be incurred by his adult child. While they likely have no true legal right to hold him responsible if he doesn't agree, the father is still concerned that he may have to deal with collection calls, referrals to collection agencies, etc. It is a headache he wants to avoid.

As of right now the plan document does not provide for any election to drop otherwise eligible children. However, in a divorce situation, we do not allow the spouse to be unilaterally dropped from the plan without a court order.

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mal, thank you for the helpful explanation. It shows once again how difficult it is for every practitioner to imagine every concern.

So that I might learn some more, what is it about the group health plan's administration that would cause a healthcare provider to learn the identity of a person other than the covered beneficiary?

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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Since I'm more of a retirement plan person, pardon if this is a stupid question but...

Is there some aspect of the health care reform that now prevents the deletion of dependents during a plan's annual enrollment? Has something happened that the plan now cares who is added or dropped beyond the simple eligiblity rules of the plan? Are ya'll suggesting that a person now has to be eligible to be dropped from a plan (not just to be added to it) (other than the standard qualifying event rules)?

Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra

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Since I'm more of a retirement plan person, pardon if this is a stupid question but...

Is there some aspect of the health care reform that now prevents the deletion of dependents during a plan's annual enrollment? Has something happened that the plan now cares who is added or dropped beyond the simple eligiblity rules of the plan? Are ya'll suggesting that a person now has to be eligible to be dropped from a plan (not just to be added to it) (other than the standard qualifying event rules)?

I think the issue is whether the parent/employee has the ability to drop the (adult) child from the plan or whether the child has the independent right to enroll apart from the wishes of the parent/employee.

I have not seen subsequent guidance since I posted my original question.

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This is an interesting question, and I agree with the earlier post that I have not seen anything specifically addressing this issue. But based on what I have seen, and the intent of the law, I don't know if I were the employer I would drop the child in question. Let me explain.

1. The intent of PPACA was to get people insured. For a company to drop a dependent at the request of the parent, and then have the dependent want coverage, seems like a formula for disaster.

2. Reading the definition of who is eligible, it states that the "group plan or health insurer must base eligibility for dependent child coveage in terms of the relationship between the child and the participant (or primary subscriber) and may not deny or restrict coverage based on factors, such as financial dependency on the participant (or primary subscriber),etc.

I receive many newsletters/opinions from legal firms and many describe the relationship as between the carrier and the dependent. For example, The new regulations provide that effective for plan years beginning on or after September 23, 2010 (effective date), any group health plan or group health insurance issuer (plan), which provides coverage to dependent children must make coverage available to dependent children until they have attained the age of 26.

So, nothing definitive, but as I start to read more about this subject, I would be leary about dropping the kid.

Hope this helps.

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