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Most Employers Waiting to Cover Adult Children, Survey Finds

May 19, 2010
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More than three-fourths of employers say they will wait until the effective date to comply with a provision in the health care reform law that requires group plans to extend coverage to employees’ adult children up to age 26, according to a new survey.

Among 661 employers responding to the survey by New York-based Towers Watson & Co., 16 percent said they would extend the coverage before the required effective date, 78 percent said they would wait until the effective date, and 6 percent did not yet know.

The law requires the extension to be made on the first day of the plan year that starts after September 23. For calendar-year plans, which are the most common, the effective date is January 1, 2011.

Few employers intend to comply early because of the demands that would put on company resources, said Randy Abbott, a Towers Watson senior consultant in Wellesley Hills, Massachusetts.

“Early adoption means more communications and more administrative issues to deal with. At a time when many employers are resource-constrained, they are prepared, unless there is overwhelming demand, to wait until the effective date,” Abbott said.

So far, just one major self-funded employer—United Technologies Corp. in Hartford, Connecticut—has said it will comply early. Effective immediately, the company is continuing coverage of employees’ adult children enrolled in its plan who would have lost coverage for reasons that include graduation from school.

Then on July 1, coverage will be offered to employees’ adult children up to age 26 regardless of whether they are covered now, unless they are eligible to enroll in another employer’s health care plan.

A top company executive earlier said United Technologies is complying sooner than required because it is the right thing to do and because such action is consistent with its practice of providing competitive benefits.

Interim final regulations published by the Internal Revenue Service, and the departments of Labor and Health and Human Services estimate that the coverage expansion would increase premiums by an average of 0.7 percent in 2011.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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