Can Children Stay on Your Health Insurance If They Are Not Full Time Students?

As children grow into adults and leave the nest, they typically become less financially dependent on their parents in the years following high school and college. Though many young adults begin to gain financial independence during their late teens and early 20s, the cost of health insurance can prove demanding on a tight budget. Conveniently, federal regulations now allow adult children to remain on their parents' health insurance policies into their adult years while they gain their financial footing.

The Affordable Care Act

• The Affordable Care Act of 2010 reformed the U.S. health care system by implementing a series of laws set to go into effect between 2010 and 2014. Among the guidelines is a rule requiring that insurance companies allow policyholders to add or keep their adult children on their insurance policies until they reach age 26. The insurance policies must treat adult children as dependents, regardless of whether the child lives at home with the parent or a dependent for income tax purposes.

Considerations

• Before the Affordable Care Act, some state laws and insurance companies allowed adult children to remain on their parents' health insurance policies with conditions. Children had to be full-time students away at college and unmarried. Under the new law, there are no such requirements. However, a married child who opts for coverage through his parents' health insurance may not add his spouse or children to the policy.

Exception

• A clause in the Affordable Care Act makes an exception for health insurance policies that were in effect before passage of the bill. Called a "grandfather clause," the exception states that while those policies must provide dependent coverage for adult children up to age 26, they can exclude children employed at a job with access to employer group benefits. However, this exception only applies until January 1, 2014, when the health plans must offer coverage to all adult children under age 26, regardless of their employment benefits.

Enrollment

• By law, insurance companies and employers offering group health insurance plans must notify policyholders and employees of upcoming open enrollment and provide a 30-day enrollment period. Policyholders must have formal notification or a written reminder prior to each enrollment period that they can add their adult children and minor children to the health insurance policy.