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Expert provides tips for talking to your employees about dependent coverage under health care reform

Among many other changes to your employee benefits offerings, health care reform laws require employers to cover dependents through age 26. According to experts at Benz Communications, HR needs to get in front of this new rule in a hurry, saying you’ll want to do so before your call center or HR generalists say conflicting things to employees. Founded by Jennifer Benz in 2007, Benz Communications is a San Francisco-based, HR communications strategy boutique. Here’s what they had to say about the new law.

Expert advice

What’s the law say about eligibility? The interim final regulations have been issued by the Department of Labor, providing clarification on what employers and employees should expect:

  • The definition of an eligible dependent will now include adult dependent children up to age 26. Further, adult dependents do not need to be enrolled in school; they can be married; and they do not need to be financially dependent on their parents. If adult children have a job with employer-sponsored coverage, then he or she is not eligible for their parent’s plan.
  • While eligibility is extended to adult children of employees, it is not extended to the spouse or children of the adult child.
  • All dependents, including those previously dropped from coverage and dependents of parents who’ve opted out of their employer’s plan, must be invited back during your enrollment period in writing.

Get your planning started now. As your benefits team crunches the numbers on what this influx of new participants might mean for overall plan costs, you can begin to answer the barrage of questions that’s coming your way soon! You can also help prepare your administrator or HR team–anyone who is fielding questions about your benefits.

  1. Get talking points to your call center. You want consistent answers to eligibility questions. Now that the final regulations have been issued, don’t wait to get two or three key points into their hands (see below).
  2. Draft the new definition of an eligible child. The new language will have lots of homes–in your enrollment communication, your benefits website, your SPDs and possibly your employer handbook.
  3. Update your enrollment key messages. The regulations require that you prominently announce dependent eligibility up to age 26.
  4. Post a blog about your plans in advance. You can save your call center a lot of hassle if you proactively communicate the regulations and your approach to them well before the enrollment process.
  5. Take a time out on any dependent audit process. Many employers have made a concerted effort to randomly or fully audit the eligibility of the dependents on their plans. You’ll need to comb through all the forms and notices to ensure that they’re updated appropriately.
  6. Re-examine your annual student certification process. If you’re like most large employers, you request verification of a dependent’s student status prior to your fall enrollment period. You’ll need to comb through all the forms and notices to ensure that they’re updated appropriately.

What if your plan year starts mid-year? In theory, you have more time to figure things out. The law states that employers with plan years that begin on or after September 23, 2010 must comply with the new eligibility rules. That means, if your plan has a July 1 plan year, you can wait until your spring enrollment in 2011 to officially invite dependents onto your plan. Good news? Maybe. When fall enrollment begins for the majority of large employers, you’ll need to be ready for questions about when you’ll accept older kids onto your plan. And, you may already be feeling pressure to add older kids on sooner, based on media coverage and what your peer companies are doing.

Talking points for employees on new dependent eligibility rules.

l The eligibility rules for children are changing, based on the new health care reform signed into law in March 2010. The massive health care legislation includes many provisions –some that impact health plans like ours and some that impact other parts of the health care system, including Medicare and individual health insurance policies. This provision is one of the first that impacts our plan.

 

l Your children, up to age 26, will be eligible as of January 1, 2011. [ Alter if your plan year isn't January 1.] Based on the new legislation, your biological or legally adopted children up to age 26 are eligible for our plan as of January 1, 2011. We’ll provide additional detail about eligibility rules on this date.

 

l During our annual enrollment period this fall, you’ll have the chance to enroll your child when you enroll yourself. Every fall, you have the chance to review your health plan options and make any changes you wish –including adding or dropping eligible family members. At enrollment, you will also be able to enroll dependents who lost eligibility because their full-time status or age changed. [ Insert details about typical proof of eligibility documentation required at enrollment --or if not, remind employees about the repercussions for enrolling ineligible dependents.]

How will this actually be administered? We are curious how employers will administer the enrollment process of these new dependents. What forms will be required at enrollment to prove that adult children meet the new eligibility rules? As dependent audits have proved, not everyone understands them. Yet, like dependent audits, employers will most likely put the burden of proof onto employees. Clearly communicating the administration process will be critical to success and we’ll need to wait and see what those new administration rules require.

Answers to employees’ frequently asked questions

This is a template for answers to frequently asked questions your employees may have about health care reform. To use these FAQs, you should review in detail and edit carefully to be consistent with your benefit plans, the tone of your employee communication and your benefits strategy. In addition, you’ll want to customize questions based on the start and end of your plan year. You may also want your health care consultants and attorneys to review your answers before you make them widely available.

Question: The news says that many health carriers –including ours –are already covering older dependents. Why can’t I add my child now?

Answer: The provision takes effect for us [ insert plan year start date], the start of our plan year. Making any change to our plans takes careful planning. Congress understands that this new provision requires administrative, budget and communication considerations. That’s why the law affords employers advance notice of the provision and time to comply with it.

The law encompasses provisions that impact employer-sponsored health plans, like ours, as well as provisions that impact the individual health plans, sponsored by health carriers. Many of the headlines you see relate to health carriers and their business decision to allow individual policy customers to add their adult children onto their plan.

Watch for our enrollment materials this fall for action steps to enroll your child for coverage effective [ insert coverage effective date].

Question: The law was signed in March 2010. When will I be able to add my child(ren) to my plan?

Answer: [ Adjust this for when your plan year begins and ends.] This component of health care reform doesn’t take effect immediately because Congress understands that it takes time for the administrative and budget planning process to occur in companies. So, this provision of the law is tied to an employer’s plan year–ours being [ insert your plan year]. Specifically, the law states that this provision becomes effective at the start of the plan year after September 23, 2010. And for us, that next plan year is [ insert start of plan year].

We know having access to benefits coverage for your children is very important. You may have options to secure stop-gap coverage for children who are graduating from college or aging out of dependent coverage on a family policy. Check with your medical plan to start.

[ Include this section if your team is evaluating whether you can comply earlier than required.] Currently, our Benefits team is researching and assessing how this affects each plan we offer and whether it’s feasible to offer this coverage before the required date.

We will keep you informed of this and other impacts of health care reform as soon as we have more details.

Question: My daughter is 23 and on my plan, but she’s scheduled to lose coverage soon. How can I keep her on my health insurance?

Answer: Your daughter will become eligible again [ insert the start of your plan year]. If she ages out of our plan when she will no longer be a full-time student, there are a few actions she can take to maintain insurance coverage.

  1. First, check with your medical plan provider. Many health insurance companies have volunteered to provide coverage for young adults losing coverage as a result of graduating from college or aging out of dependent coverage on a family policy. This stop-gap coverage, in many cases, is available now.
  2. Second, check our annual enrollment materials sent to your home [ add in when materials are sent]. You’ll be able to add her back to your health plan effective [ insert effective date]. To avoid pre-existing condition limits, be sure that she maintains coverage. When you enroll your daughter in the fall, you’ll be asked for documentation that she’s had continuous coverage.

Question: My son age 24 was dropped last year. He has a pre-existing condition. When I enroll him, will there be limits on his coverage?

Answer: [ Modify based on your plan specifics.] Maybe. If your son had continuous coverage after he was dropped from our plan and until he rejoins our plan, then no. However, if your son has been uninsured since he became ineligible for our plan, then yes, he would be subject to limits. [ If your plan has pre-existing exclusions, you can point employees to the newly created high-risk insurance pools that exist until 2014, when all pre-existing conditions are banned.]

Question: What will it cost to cover my adult child?

Answer: Check the enrollment materials mailed to your home [ insert when materials are mailed]. At that time, we’ll share the 2011 premium costs.

Question: What documentation will I need to provide cover my child?

Answer: In 2011, you will need to provide [ insert documentation requirements relating to adult child's employment]. Annually, we will no longer require you to complete the student certification process, because full-time student status will no longer be an eligibility requirement.

Source: Guidance taken with permission from two Benz Communications blog posts: Health care reform: Age 26 Dependents –What’s the Right Message? written by Liz Rowell and posted on May 24, 2010; and Health care reform: Age 26 Dependents –FAQs, written by Jennifer Benz and posted on June 1, 2010; www.benzcommunications.com.