Under Illinois law, a health insurance policy that provides coverage for dependent children must include extended dependent coverage for qualifying dependents up to age 26 and up to age 30 for military veteran dependents. There are additional extensions for disabled dependents.

The Affordable Care Act (ACA) requires health plans and issuers to make dependent coverage available for adult children up to age 26.

STATE DEPENDENT COVERAGE REQUIREMENTS

Applicable Health Plans

Illinois dependent coverage laws apply to all individual and group health insurance policies and HMO contracts (including dental and vision) that provide coverage for dependents.

Insurance plans that are not subject to Illinois' dependent coverage laws include:

Qualified Dependents

Health insurance policies and HMO contracts that provide dependent coverage must extend coverage to adult children who:

To be eligible up to age 30, a dependent must be a military veteran and must:

• Be an Illinois resident;
• Have served in the active or reserve components of the U.S. Armed Forces, including the National Guard;
• Have received a release or discharge other than a dishonorable discharge; and
• Submit to the insurer proof of service using a DD2-14 form known as a "Certificate of Release or Discharge from Active Duty" issued by the federal government to all veterans, which will state the date on which the dependent was released from service.

A child can be eligible for dependent coverage even if he/she cannot be claimed as a dependent on a parent's income tax return. In addition, health insurance policies and HMO contracts subject to Illinois dependent coverage laws must provide coverage regardless of student status.

Disabled Dependents

Insurance plans must extend coverage to a child who has attained the limiting age under the policy if the child is incapable of sustaining employment and is dependent on his or her parents or other care providers for lifetime care and supervision.

Notices Provided by the Employer

Employers offering health insurance with dependent coverage to their employees must provide notice regarding coverage for a dependent:

• Upon 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.

Enrollment Period for Eligible Dependents

Under Illinois dependent coverage laws, group health insurance policies must allow enrollment for eligible dependent during the annual open enrollment period or at the policy's renewal or anniversary date.

In addition, eligible dependents may be enrolled if a special enrollment event occurs, such as loss of other coverage. The eligible dependent must be enrolled within 30 days of the qualifying event for special enrollment to be valid.

FEDERAL DEPENDENT COVERAGE REQUIREMENTS

Applicable Health Plans

Health plansincluding insured and self-insured group health plansthat provide dependent coverage of children are required to permit an adult child to stay on family coverage until age 26.

Dependent Eligibility

Under the ACA, health plan coverage must be made available to qualifying young adults up to age 26. Qualifying young adults include sons, daughters, stepsons, stepdaughters, adopted children and possibly eligible foster children of the parent, regardless of the qualifying young adult's marital status. It does not matter whether the qualifying young adults are tax dependents for federal income tax purposes. Parents may decide whether to add adult children to their plan, but there is no requirement to cover the child of a dependent child.

Dependent Student Coverage

A federal law (Michelle's law) also extends coverage for students with a serious illness or injury who take a medically necessary leave of absence. Under this federal law, coverage is extended for one year from when the leave of absence begins unless, under the terms of the plan, coverage would terminate as of an earlier date. The ACA diminished the impact of Michelle's Law, which will now primarily affect plans that provide coverage to dependent students who are age 26 or over.

TAX LAW

When the ACA was passed, the federal tax code was also revised to provide that, for federal tax purposes, the value of employer-provided coverage for young adult dependents is excluded from the employee's gross income through the end of the tax year in which the dependent child turns age 26.

Illinois automatically conforms to the tax treatment imposed by federal law. Therefore, the cost of health coverage for eligible dependents in Illinois will not be subject to state tax up to the end of the year in which they attain age 26.