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What’s the new law? Must we now provide health insurance to employees’ adult children?

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in Employee Benefits Program,Human Resources

Q. I understand that Illinois has passed a new law requiring certain employer-provided insurance policies to cover an employee’s dependents who are up to age 26 (or up to age 30 in some instances). Which employers and which policies are affected by the new law?

A.
Yes, there is indeed a new law (215 ILCS 5/356z.12). It applies to all individual and group health insurance policies and HMO contracts (including dental and vision) that offer dependent coverage. Health coverage provided to state, county and municipal employees (and employees subject to the Illinois Schools Code) must also meet the new young-adult dependent coverage requirements.

Note, however, that the new law does not require employers to offer health insurance benefits or to offer dependent coverage benefits to employees.

The new law does not apply to:

  • Individual or group health insurance policies or HMO contracts that do not include dependent coverage
  • Self-insured, nonpublic employers
  • Self-insured health and welfare plans, such as union plans
  • Insurance policies or trusts issued in other states.

How does the new law work?

Q. If our company’s insurance policies are covered by the new Illinois law, what are the new requirements with respect to coverage of young adult dependents?

A.
If your company’s policies offer dependent coverage, that dependent coverage must allow for the enrollment of any of the employee’s dependents who are:

  • 26 or younger and unmarried, regardless of educational or student status, or
  • 30 or younger, if unmarried and a military veteran (released or discharged from military service other than dishonorably).

When did the law go into effect?

Q. When must we allow employees to enroll dependents covered by the law?

A. The new law technically became effective on June 1, 2009. It requires that new covered policies issued after that date include the young-adult dependent coverage.

Existing covered policies must include the new required dependent coverage when the policy is amended or renewed after June 1, 2009. For example, if your policy renews every year on Jan. 1, your policy must include the required coverage by Jan. 1, 2010.

Moreover, all covered policies must offer an initial 90-day enrollment period to eligible dependents. New policies issued after June 1, 2009, must provide the initial 90-day enrollment period immediately upon issuance or delivery.

For existing policies, the initial 90-day enrollment period will begin on the date your policy is issued, amended or renewed. Annual open enrollment periods and other special enrollment events also apply.

Is it OK to offer the new coverage voluntarily?

Q. If my company’s insurance plans are not covered by the new law (for example, if we are self-insured), may we voluntarily offer the expanded dependent coverage? We don’t want to lose employees who might go to work for a competitor offering the coverage.

A. Yes. Nothing in the new law prevents employers that are not otherwise covered from voluntarily offering coverage to the categories of young-adult dependents that the new law covers.

However, you should confer with your stop-loss-coverage carrier to ensure that any additional categories of dependents are covered under those policies.

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