Looks like most 26-year-olds won’t be covered under their parents’ employer-sponsored health plans until the law requires it.
You remember that under the recently-passed healthcare reform bill, companies were ordered to extend health insurance to employees’ children up to 26 years old. Previously, employers covered children up to 25 — as long as they were students.
The provision drew a storm of questions about the tax implications of employers offering the increased coverage before the law became effective Sept. 23, 2010.
The feds, hoping to encourage employers to add the new coverage immediately, ruled that the benefit wouldn’t be taxable to either employers or employees.
But it doesn’t look like many companies are taking the hint.
Only 19% will act before deadline
A little more than three-quarters (77%) plan to wait to extend health care coverage until they are required to do so, which, in many cases, will be the the plan year beginning next Jan 1, according to new research from HR consultant Hewitt Associates.
Just under one in five (19%) plan to extend health care coverage to eligible adult children early. Of those companies, 10% will voluntarily extend coverage early for all eligible adult children and another 9% will do so for graduating students already covered under company health care plans, Hewitt said.
It appears that companies aren’t expecting a giant jump in costs for expanding their plans. Of the 57% of companies that have estimated the cost of expanding coverage to adult children, 18% expect to see less than a 1% increase in total annual health care costs between 2011 and 2014.
Twenty-six percent of companies project a 1% to 2% increase, and 11 percent expect costs to increase between 2% and 5%.
