Health Insurance for Adult Children

We put our 24-year-old son back on our health insurance policy at the beginning of the year, but he just landed a new job with benefits. The health insurance at his company isn’t nearly as good as our policy, though. Can we keep him on our policy, or does he have to take his employer’s insurance?

That’s a tricky question. The health-reform law allows parents to keep their grown kids on their health insurance coverage until age 26. But the rules are complicated if the child’s new employer offers health insurance benefits (regardless of whether he or she signs up for the employer’s plan).

The answer depends on whether the parents’ health plan is considered to be “grandfathered,” meaning it has remained essentially the same since health care reform was enacted on March 23, 2010, or “nongrandfathered,” meaning it’s either a new plan or an existing plan that’s made significant changes to its premiums and benefits since then. Plans that are not grandfathered are subject to some additional provisions of the new law that do not affect grandfathered plans.

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Your son can stay on your policy if it is not grandfathered even if he is offered health insurance coverage at his new job. But if your plan is grandfathered, then it’s up to your employer to decide how to apply this rule. Some employers will allow adult children to stay on their parents’ policies even if they are eligible for health insurance coverage through their jobs. But other employers with grandfathered plans will choose not to extend coverage to adult children who are eligible for their own insurance through a job. “How ‘good’ the coverage is, or even whether the child takes that other coverage, is not relevant,” says Pearce Weaver, senior vice-president of Fidelity Benefits Consulting.

These rules, however, can be difficult to enforce. “Some employers conduct dependent audits to confirm eligibility of covered dependents, including the child’s employment” says Weaver. “And many employers reserve the right to take disciplinary action against employees who fraudulently cover ineligible dependents,” he says.

Ask your employer or insurer whether your plan is considered to be grandfathered and find out about the rules for keeping your son on your policy. Beginning in 2014, new rules kick in that will allow adult children to stay on their parents’ plans even if they are offered coverage through their employer.

For more information about the nuances of this rule, see the Young Adult Coverage Until Age 26 section of the Healthcare.gov Web site. See 6 Ways to Cash In on the Health Law for strategies to make the most of the new rules.