The Patient Protection and Affordable Care Act (ACA) mandates that all health insurance carriers in every state that offer coverage to both adults and their dependents must allow dependents to remain on their parents or guardians’ “family” plans until the dependents are 26 years old.
The issued regulations state that young adults are eligible for this coverage regardless of any, or a combination of any, of the following factors: financial dependency, residency of the young adult, student status, employment status, or marital status. This applies to all plans in the individual market and to almost all employer plans (small group, large group, including self-funded or so-called ERISA plans) created after March 23, 2010.
PPACA & HCERA; Public Laws 111-148 and 111-152: Consolidated Print
‘‘SEC. 2714. EXTENSION OF DEPENDENT COVERAGE.
‘‘(a) IN GENERAL.—A group health plan and a health insurance issuer offering group or individual health insurance coverage that provides dependent coverage of children shall continue to make such coverage available for an adult child until the child turns 26 years of age. Nothing in this section shall require a health plan or a health insurance issuer described in the preceding sentence to make coverage available for a child of a child receiving dependent coverage. [As revised by section 2301(b) of HCERA]
‘‘(b) REGULATIONS.—The Secretary shall promulgate regulations to define the dependents to which coverage shall be made available under subsection (a).
‘‘(c) RULE OF CONSTRUCTION.—Nothing in this section shall be construed to modify the definition of ‘dependent’ as used in the Internal Revenue Code of 1986 with respect to the tax treatment of the cost of coverage.”
The States’ Role
The extension of coverage for young adults under their parents’ or guardians’ health insurance plans, like many of the ACA’s provisions, originated in state legislatures. Prior to the implementation of the ACA, at least 31 states required carriers to extend coverage to young adults. The age at which insurers were no longer required to provide coverage to young adults under their family plans varied by state. Additionally, some states required certain conditions to be met by young adults in order to be eligible for coverage under their guardians’ plans. For example, a number of states required that young adults be unmarried in order to qualify.
States may continue with current state law requirements for extended dependent coverage unless they prevent the application of the ACA. As with other state health insurance statutes, the state mandate language enables the state insurance departments to educate the public, and to implement and enforce those laws directly, including use of state courts and state-specific penalties.
State and local governments, as employers and sponsors of coverage plans, are required to notify those under the age of 26 whose coverage has ended or who were denied coverage under their plans before turning 26, of enrollment opportunities.
The federal ACA law applies to young adults in all states.
As of 2012, (before the ACA was fully in effect) the following 37 states had already extended the age that young adults can remain on their parents' health insurance plan: Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin and Wyoming.
There is considerable variation among state laws in terms of eligibility requirements. At least 30 states have extended dependent coverage, regardless of student status. Most states require that a young adult be unmarried and financially dependent on their parents in order to qualify for extended dependent coverage.
States may continue to apply current state law requirements for extended dependent coverage except to the extent that the requirements prevent the application of the Patient Protection and Affordable Care Act (ACA). [Reviewed/updated 2016]