Health Care Law Changes for 2011: Adult Children Included in Parents' Insurance

Jan. 1, 2011— -- Under President Obama's Affordable Health Care Act, which was signed into law on March 23, 2010, insurers must offer parents the option of keeping their adult children covered under their medical plan until age 26. This mandate will go into effect for most medical insurance plans whose benefit year begins Jan. 1, 2011.

Most health insurance plans previously dropped children from parental insurance plans once they turned 19 or graduated college.

This controversial insurance modification is seen by many Americans as an extension of childhood for adults in their 20s, while for others, the measure is necessary to end the insurance gap that affects many young people.

A 2008 survey conducted by the National Institutes of Health showed that about 30 percent of adults between the ages of 20 and 29 do not have health insurance, a circumstance largely brought on by large numbers of young adults taking nontraditional, temporary or low-paying jobs that do not come with conventional employee benefits such as health insurance. That makes this age group the largest without health insurance.

Leann Olson's 21-year-old son, Alex, might have been a statistic too if it hadn't been for her husband's health insurance plan bridge. It allowed Alex to be covered this winter during his sabbatical leave from college. Leann Olson and her husband, a steel worker, would have been in a severe financial bind if they'd been forced to pay the up-front health costs for their son, whose type 1 diabetes is debilitating and chronic. Alex Olson's body has stopped producing insulin, so he depends entirely on an insulin pump that costs $9,000 per cycle. This is on top of his monthly medications, which his mother estimates cost between $400 and $500 a month.

"He needs great insurance, and being sick -- not in school, without a job -- just wasn't an option, not when there's a risk of him needing to be rushed to the hospital at any given moment," Leann Olson said. "This [bridge] allows him to take his time to find a job with insurance, or decide to go back to school in his own time. It's a great thing, a step in the right direction."

While coverage for adult children depends entirely on their parents' insurance policy (for example, vision and dental care may not be included as eligible benefits), adult children -- including those married and the financially independent -- can now be included on their parents' plans.

Under the federally mandated new law, all health care plans are required to provide coverage to children under the age of 19, regardless of pre-existing health conditions, but similar coverage may not be extended to those older than 19. Additionally, bringing in an adult child will incur additional costs, the extent of which depends on the insurance provider and the amount of dependents listed on a plan. However, a qualified young adult must be offered coverage at the same cost as any other dependent on a parent's existing plan.

No special action is required by parents or their insurance dependents. Their dependents only need to enroll during the plan's open enrollment period, which, for most plans. ends on the first day of the new benefit year.

But realize that a parent's plan may not be the most financially sound option available. Individual health care or subsidized university health coverage may prove to be a smarter choice for children, depending on their health needs, financial situation or marital status.

However, the general erasure of barriers to health care coverage is what Kamal Muilenburg says is the biggest achievement of the Affordable Health Care Act. Muilenburg is under continuing treatment for metastatic breast cancer and opted to include her 25-year-old daughter on her health insurance in October. Like Muilenburg, her daughter has a serious illness that requires treatment.

"It's just me and my daughter, and by having a child whose insurance isn't covered by work while I'm on disability for my treatment … money is really tight. But at least we now have insurance," said Muilenburg, who is the associate director of San Diegans for Healthcare Coverage, an advocacy group. While the conditions of health care reform may not suit everyone, Muilenburg calls the modifications "a lifesaver."

Says Muilenburg, "I will be using my insurance extensively for the rest of my life, and I could be undergoing treatment for the next 10 or 15 years. My coverage isn't being compromised by my daughter's needs, and this gives me huge peace of mind."

To learn more about the Affordable Health Care Act and its impact on young adults, click here.