By: Andrew J. Bezouska
Kelly S. Kuglitsch
Starting in January, Wisconsin’s health insurance requirements for certain adult children will more closely match federal coverage requirements enacted in last year’s health care reform legislation. As a result, insurers and self-insured governmental plans that provide dependent coverage will be required to cover adult children until age 26, regardless of marital status and without the comparison of premiums in the prior law.
Currently, Wisconsin insurance law requires coverage for unmarried children over 17 but less than 27 years of age who either are not eligible for their own employer-sponsored coverage, or for whom the cost of employer-sponsored coverage exceeds the parent’s cost in adding the child to the parent’s plan. The law also provides coverage for certain full-time students, regardless of age, who were under 27 and were attending an institution of higher education on a full-time basis when they were called to active duty in the National Guard or in a reserve component of the U.S. Armed Forces. Last year’s health care reform legislation also created a federal requirement for group health insurance plans and health insurers to cover adult dependents. Unlike Wisconsin’s requirement, the federal requirement mandates coverage until the adult child reaches age 26, regardless of the child’s marital status and regardless of the cost of insurance.
Wisconsin’s Budget Bill (2011 Wisconsin Act 32) brings Wisconsin’s insurance requirements more closely in line with federal coverage requirements for adult children. The new provisions are effective for insurance policies first established, extended, modified, or renewed on or after January 1, 2012, or later for certain collectively bargained plans. Also, prior to January 1, 2014, "grandfathered" plans (as defined by the federal law) are not required to provide dependent coverage for an adult child who is eligible for other employer-sponsored coverage. The new law maintains the coverage provision for full-time students called to active duty in the U.S. Armed Forces, without the requirement that the individual be unmarried and without the premium comparison requirement.
Although Act 32 partially federalizes insurance requirements related to adult children, the law does not incorporate the extension of the federal tax exclusion for these individuals into the state tax code. As a result, the value of coverage provided to individuals who are not tax dependents under the Internal Revenue Code (in accordance with the pre-amended federal rules) will still be imputed as Wisconsin income.
Employers sponsoring self-insured plans may need to take responsibility for amending plan documents to comply with the new requirements. Employers with fully insured plans, however, may be able to rely to a greater extent on their insurers or administrators to incorporate changes. The Employee Benefits Practice Group at Davis & Kuelthau, s.c. can assist employers with the new health insurance provisions or with any other issues related to the impact of Act 32 on employee benefit plans.
For more information, please contact Andrew Bezouska (firstname.lastname@example.org) at (608) 280-6205, Kelly Kuglitsch (email@example.com) at (414) 225-1417 or your Davis & Kuelthau attorney.