Ask ICMA-RC

How did the health-care reform law change the rules for keeping adult children on their parents' health insurance policies? What are the new rules?

The new law requires insurers to let children stay on their parents’ health insurance policies until age 26, even if they graduate from college before then, as long as the child doesn’t have a job that offers health insurance. The adult child doesn’t need to be a dependent for tax purposes to qualify for the extended coverage, doesn’t need to live at home, and can even be married (although the law does not extend the coverage to the child’s spouse and their children).

This provision of the law takes effect starting with the first plan year after September 23, 2010, which in most cases will be January 1, 2011. During open-enrollment season this fall, most insurers will provide detailed instructions about the steps you need to take to reinstate children who had “aged off” your policy in the past.

Several insurers are allowing this year’s college graduates to remain on their parents’ policies before the new law takes effect, even though they would otherwise lose coverage at graduation. Ask your human resources department or the insurer about its rules. Also, 30 states already have laws on the books that require insurers to let adult children stay on their parents’ policies until their mid-twenties.

Even if your child can remain on your policy, it’s important to compare any extra premium you’d pay with the cost of buying separate insurance for your new grad. In most states, it can be surprisingly inexpensive for healthy people in their 20s to buy health insurance.