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New Requirements for Dependent Coverage

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April 24, 2009

Pursuant to Illinois Public Act 95-0958 (HB5285), if coverage of dependents is offered by a group or individual health insurance contract, an HMO contract, or a health plan offered to public employees, the coverage must continue until an unmarried dependent reaches 26 or until an unmarried military veteran reaches the age of 30. This rule goes into effect for policies and contracts that are delivered, issued, or renewed on and after June 1, 2009.

There is no requirement that a policy or health plan cover dependents or that an employer pay the additional costs of covering dependents. However, if a policy or health plan offers dependent coverage, it must comply with the age requirements of the Act and employees must be provided with notice of the newly extended coverage, which is discussed below.

POLICIES AND PLANS NOT AFFECTED BY THE NEW REQUIREMENTS

The following types of plans will not be affected by the new requirements for coverage of dependents:

  • Individual or group health insurance policies or HMO contracts that do not include dependent coverage.
  • Self-insured plans of private employers.
  • Self-insured health and welfare plans, such as union plans.
  • Insurance policies or trusts issued in other states.

POLICIES AND PLANS AFFECTED BY THE NEW REQUIREMENTS

The following types of plans will be affected by the new requirements, but only if they offer dependent coverage:

  • Individual health insurance policies
  • Group health insurance policies
  • HMO contracts
  • Health coverage (including self-insured plans) provided to
    • State employees
    • County employees
    • Municipal employees
    • School employees

INDIVIDUALS ELIGIBLE FOR COVERAGE

Non-Veteran Dependents. For dependents who have not served in the military, coverage must be extended to dependents that are single and under age 26, but only if their parent's policy or health plan provides for coverage of dependents.

Dependents Who Are Military Veterans. Dependents who are military veterans must be provided coverage until age 30 if they are single and their parent’s policy or health plan offers dependent coverage. To qualify as a veteran, a dependent must have:

  • Served in the active or reserve components of the U.S. Armed Forces, including the National Guard;
  • Received a release or discharge other than a dishonorable discharge; and
  • Submitted proof of service using a DD2-14 (Member 4 or 6) form, otherwise known as a "Certificate of Release or Discharge from Active Duty."

ENROLLMENT

At no time may an eligible dependent be denied enrollment due to age, health status, or enrollment in an educational institution. Two separate enrollment periods apply under the Act:

  • Initial Enrollment Period. All policies and health plans covered by the new requirements must offer an initial 90-day enrollment period for eligible dependents. The initial enrollment period must begin at the time the policy is issued or at the policy or health plan's renewal or anniversary date, on or after June 1, 2009. During the initial enrollment period, limitations concerning creditable coverage, continuous coverage, or breaks in coverage may not be applied. However, pre-existing condition limitations may be applied if creditable coverage has not been established.
  • Annual Open Enrollment. After the initial enrollment period, insurers must provide eligible dependents the opportunity to enroll during the 30-day period preceding the policy or health plan’s annual renewal or anniversary date. During these subsequent enrollment periods, the insurer may decline coverage if the dependent does not have 90 days of continuous coverage without a break in coverage of more than 63 days. However, pre-existing condition limitations may not be applied during these subsequent enrollment periods.

NOTICE

Notice regarding this coverage must be provided:

  • At application or enrollment;
  • In the certificate of coverage or equivalent document prepared for an insured and delivered on or about the date on which the coverage commences; and
  • In a notice delivered to an insured on a semi-annual basis.

Employers who are covered by the Act should contact their insurance carrier, HMO provider, or third party administrator to ensure that appropriate plan modifications and notices will be prepared on a timely basis.

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