Health Insurance Navigator

Details about keeping or adding adult children onto a parent’s health plan can still be fuzzy. A Health Insurance Navigator reader wrote in with the following question:

My son just graduated from college. He’ll no longer have insurance through his university and he doesn’t yet have a job. I want to add him to my employer’s plan but was turned down. A representative of my company said our plan is self-funded and that the law allowing kids to stay on their parents’ insurance until age 26 doesn’t apply. Are they right?

The Self-Funded Plan

No. That’s not right. The provision of the health reform law that allows adult children to stay on their parents’ health plan applies to all insurers.

A plan that is self-funded is one in which the employer pays health care claims on its own, as opposed to buying coverage from an insurance company. This often confuses people — although your company pays claims from its own funds, it likely works with an insurance company to offer employees a provider network, to process claims, and to take on other administrative functions.

Still, it’s a behind-the-scenes detail that usually doesn’t come to light except in situations like yours, when the way in which the plan is administered suddenly becomes important.

Self-funded plans are regulated by the Employee Retirement Income Security Act (ERISA), and can be exempt from certain state insurance laws. More than half of all insured workers get their health insurance through a self-funded plan.

It’s Your Right

The right to keep your adult child on your insurance plan until age 26 is a federal law that went into effect last year as a result of health reform. Though there will be aspects of the new law with which self-funded plans will not be required to comply, this provision is not one of them. By law, you are allowed to keep your adult child on your health plan.

Other provisions with which self-funded plans will need to comply include preventive services with no cost sharing and no lifetime or annual limits on coverage.

If you are a young person looking for health insurance, or a parent looking on behalf of your child, check out this previous post about finding health insurance for young adults. And for more information about extending insurance to young adults, here’s a helpful question/answer write-up by the U.S. Department of Health and Human Services.

Got a health insurance question? Post it below. I’ll respond in this blog each Thursday to as many of your questions as I can.

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Sources:
Healthcare.gov
Kaiser Family Foundation: “Health Reform Source: How does the new law apply to companies with self-funded plans?” and “Brief Examines Self-Insurance Among Small Employers Under Reform.”