Putting Adult Children Back on Your Health Plan

If your kids are too old to be covered by your policy, they may be able to get back on after the health-reform law takes effect.

Are the companies that say they will extend coverage to recent grads before the new health-care-reform law takes effect also reinstating kids who are too old to be on their parents’ health-insurance policies?

Generally, early implementation of the new rule applies only to children who would otherwise be dropped from their parents’ policies before the new law kicks in. To qualify for this early effective date (June 1 for many of the companies), children must be currently covered under their parents’ policies; adult children who have already "aged out" and want to get back on must wait until the new plan year that starts after September 23, 2010 (for many plans that means January 1, 2011, because the plans operate on a calendar-year basis). Contact your firm’s HR department or the insurer for details.

My daughter is 24 and works only part-time, without any benefits. Will she be able to get back on my policy? I don’t claim her as a dependent on my taxes.

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She’ll probably be able to get back on your policy once the law takes effect. The rules are quite broad: "Adult children do not have to be dependents of the parents for tax purposes, they don’t have to be living at home, they don’t have to be full-time or part-time students, and they may be married," says Randall Abbott, senior consultant with Towers Watson, a global benefits-consulting firm. But children who have the option to sign up for health coverage through their employer cannot qualify to remain on your policy.

Regulations should be issued soon with more details about who qualifies and on the procedures for reinstating children who have been dropped from their parents’ coverage.

Other health-care news: Update on the COBRA subsidy. There’s good news for people who have been laid off recently. After several extensions, the COBRA subsidy was scheduled to expire for newly laid-off people on March 31, 2010. But Congress has okayed another extension, to May 31, 2010, for providing the 65% COBRA subsidy to people who are newly laid off. The subsidy lasts for up to 15 months.

For more information about the COBRA subsidy, see the Department of Labor’s COBRA subsidy page. For advice about how to find coverage after COBRA expires, see How to Cope Without COBRA.

Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.