QUESTION: Our company sponsors a self-insured major medical plan and a separate limited-scope dental plan, which qualifies as an excepted benefit. Both plans offer coverage to eligible employees and dependent children, but only the major medical plan makes coverage available until a child turns age 26. Is it permissible for our limited-scope dental plan to cover dependent children only until age 19?
ANSWER: Yes, it is permissible for your company’s limited-scope dental plan to cover dependent children only until age 19 if it qualifies as an “excepted benefit.” As background, health care reform generally requires group health plans that offer dependent coverage to continue making such coverage available for an employee’s adult child until the child’s 26th birthday—regardless of the child’s residency, financial dependence, student status, employment, or other factors. In addition, applicable large employers face potential employer shared responsibility penalties if they do not offer coverage through the last day of the month containing the 26th birthday of an employee’s adult child.
The dependent coverage mandate and employer shared responsibility do not apply to “excepted benefits.” Thus, excepted benefits (including limited-scope dental plans that meet the applicable requirements—see our Checkpoint article) can use a narrower definition of dependent. So long as your limited-scope dental plan qualifies as an excepted benefit, it can define an eligible dependent as an employee’s child under age 19. Although not required, it is worth noting that some employers prefer to use the same eligibility definition for dependents across the various health plans that they sponsor (including excepted benefits) to ease administration.
For more information, see EBIA’s Health Care Reform manual at Sections V.F (“Excepted Benefits: Certain Health FSAs, Dental, Vision, and Others”), XI (“Dependent Coverage for Adult Children”), XXVIII.D (“Assessable Payment (Penalty Tax) When Coverage Not Offered to Enough Full-Time Employees and Dependents (the “Subsection (a) Penalty”)”), and XXVIII.E (“Assessable Payment (Penalty Tax) When Inadequate Coverage Offered to Full-Time Employees and Dependents (the “Subsection (b) Penalty”)”). See also EBIA’s Group Health Plan Mandates manual at Sections IV.D (“Plans Providing Only Excepted Benefits Need Not Comply With Some Mandates”) and VII.B (“Required Coverage for Children Under Age 26”).
Contributing Editors: EBIA Staff.