SURVEY SAYS: Will Dependent Coverage Changes Change Dependent Coverage?

May 13, 2010 ( – Clarification continues to emerge about the new healthcare reform provisions.

The most recent came when the Obama Administration this week (see Rules Bar Young Person Health Surcharges) clarified not only that the Affordable Care Act requires that group health plans and issuers that offer dependent coverage make the coverage available until the adult child reaches the age of 26, but that “they “cannot be required to pay more for coverage than similarly situated individuals who did not lose coverage due to the loss of dependent status”.

This week, I asked readers what they thought of that provision – and what it might mean for coverage/costs going forward. 

Mixed Opinions

As you might expect, opinions were mixed.  A plurality thought it was a bad idea; 18% thought it was a bad idea, and another 20% thought it was a VERY bad idea.  On the other hand, 17.6% thought it was a good idea, and another 12% thought it was a VERY good idea.

Another 7.1% thought the provision was “a little silly”, an equal (but different) 7.1% said it was a necessary way to bring healthier individuals into the healthcare “pool.” 

Roughly 6% thought the provision was “unnecessary” – and the rest said they “haven’t really given it much thought.”

Now, since the law provides that the "qualified young adult" can't be required to pay more for coverage than "similarly situated individuals who did not lose coverage due to the loss of dependent status", I also asked readers what they thought would happen as a result. 

Here people could check as many as they thought applicable – but the dominant choice, cited by more than two-thirds (67.4%) was that costs of dependent coverage would increase overall. 

That said, only about 9.5% thought that employers would drop dependent coverage, and just 10.5% thought that “nothing much” would transpire as a result.  The other responses:

8.4% - Haven’t really given it much thought

7.4% - Dependent coverage will become more important as a benefit

3.2% - costs of dependent care will decline overall

The rest (about 13%) opted for “other.”  Among the responses in that category were:

Not sure what will happen, but the result should not be different because most plans have family coverage at a certain price, regardless of the number of people covered.

I think the cost of dependent coverage will increase.  I also see employers going to a system where they charge for each dependent.  Traditionally companies charge the same for 1 or 10 dependent children.  I think you will see a cost per child system put in place.

This will be passed on the employees with higher premiums, co pays, plan changes, etc. No one said it would be free

You would think costs would decline when you bring in more healthy population, however, employer cost cutting trends makes me sway towards the idea that employers will either increase cost of dependent coverage or just flat out drop coverage altogether.

Insurance companies will do whatever they think best for their short-term bottom line.

Call me cynical (and maybe even paranoid), but I believe that many of these provisions are designed to force employers to drop coverage, which puts more people in a situation where they have no choice but to go with the government plan, giving Uncle Sam control over and access to your health care.

In essence, we are adding adults onto our plan and they are paying a child rate.

Employer subsidies for all dependents will increase.

IMHO, keeping just one more "child" on the plan, who in general is relatively healthy anyway, will not have any impact on the cost of employee+child or family coverage.

To the extent that dependent coverage is still paid for by the employer it will become more costly/valuable.

Employers will replace Family-level premiums with premiums based on number of covered family members:  employee + one, employee + two, employee + six, etc.

And then, of course, I gave folks a chance to “expand/expound” on the topic.  Here’s a sampling:

While I may feel differently when my own kids are in college, I'm disappointed by legislation that does not encourage today's young adults to "leave the nest" and take a chance on being financially independent.

Although they say the economy is improving, I would hate to be a college graduate this year facing the employment prospects (or lack thereof).  Unable to find a job and unable to afford individual health coverage would be a horrible way to start my adult life.  Thank goodness I'm old.

Health care reform is necessary; from my perspective the employer based delivery system is broken and dysfunctional.  However, the reform we got does not go far enough and does not address the root problems in the current system.

Micro-management here we come!

"You can't have your cake and eat it too.  But the government is trying.

Basically, hard working middle class Americans will pay for the health care of lower income Americans, who have even less incentive now to try to move up the pay scale."

I am going to work for repeal.  The costs of this legislation weigh much more than any benefits.

Every day we find out that HCR is going to cost more than was estimated prior to the vote.

While any action that will provide health care coverage to uninsured individuals is better than none, I am dismayed by the added burden to businesses.  Health care coverage should be provided universally and paid for with tax dollars.  How can US companies compete internationally when we are the only developed country that relies on businesses to cover health care costs?

As a benefit consultant I am not in favor of the Obamacare Plan.  However, as a parent of a 22 year old that is paying for a $5,000 deductible catastrophic plan, I will be glad to have her back on her dad's insurance plan or put her on mine.  She is a self-employed hair designer that does not have group health coverage where she works and is trying to get started in the business, so this comes at a good time.  I am sure the price of dependent coverage will increase with either plan, but just knowing that she won't have the $5,000 deductible to worry about for the next 4 years will be a huge relief for Mom, Dad and daughter.  But most parts of the Obamacare Plan stink, including the rules that affect Flexible Spending Accounts.

"It is clear to me that the tact which the powers in Congress have used is merely a stepping stone to the European model of government-controlled health care delivery for all.  The law is not sustainable financially and employer-based coverage will steadily decline over that next decade (on the same path as employer-provided pension programs) to the point that government-based programs will step in to fill the gap. 

As to the age 26 mandate, from a professional standpoint, it makes it easier to administer than our current programs.  However, it is a microcosm of the message from Congress...we can't trust you to take responsibility for your own welfare (of course, as we define welfare), so we are going to take that freedom away from you in place of the security (with strings attached) which we will either provide or mandate.  One of our forefathers said it aptly and I paraphrase, ""If a man gives up his freedom for security, he will lose both and deserves neither."""

Its about time!

As much good that was intended from implementing health care reform the unintended consequences will be greater than Congress let the American people know.  The cost will continue to rise as the legislation does nothing to control cost but is adding more people to an already broken system. Change needs to occur but this could bankrupt America.

"My biggest problem is that it includes kids who either do not reside at home or are married and have by legal definition become adults. The next thing the government will want is to cover those kids and their families. At some point you can't keep pushing expense down to the employers or ultimately there will be no employer offered medical insurance.

You would have thought they (the government) would have learned something from back in 1993 when they were responsible for enacting FASB 106 (to shore up retiree healthcare). The impact of that gem was to virtually eliminate post 65 retiree healthcare for the vast majority of employers. I pray that history doesn't repeat itself."

My goal as a parent was to raise my children to become responsible adults.  When you increase the age to which a person can hang on to being a child under mom and dad's policies, you take away their need to be responsible for themselves.  I say, take a lesson from nature, kick those baby birds out of the nest and let them learn to fly.

"Having 5 children, three of which are now over 27 and at one time had to go without insurance I feel better about my two younger ones (18 & 20) as their days left in college and being eligible under the old plan were numbered and the job market is very poor - my 27 year old is working on his masters and has yet to find employment in his field.  On the other hand the healthcare reform scares me, I'm afraid we are going to find too many hidden ""bonuses"" or ""expenses"" that will end up costing the general working public too much.   I just hope that most of the ""sky is falling"" things I've read are just fiction."

I can hardly wait for a married dependent daughter to have a premie who is not covered. This sob story will be played up in the news media and Congress will beat their collective breasts and amend the law to provide coverage for the baby as well as the spouse (or if not married the father) and anybody that they can think of at the employers expense. This will be in keeping with EBSA's mantra regarding the young adult coverage of "Protecting young adults and eliminating burdens on BUSINESS and families" (emphasis added.)

It is fascinating to me that actuarial principles have been ignored in this health care reform legislation.  There are many provisions that are simply actuarially unsound.  This is likely due to the ignorance of our elected leaders, but the American Academy of Actuaries issued several position papers on what needs to be included in health reform which were completely ignored.  If you are going to ignore the experts, it seems we may lean more to the conspiracy theory where this has been done deliberately to crash the healthcare system, so the government can pick up the pieces and take it over completely.

Doesn't it strike you that we're causing kids to be dependent rather than take charge of their situations?

Totally not needed as doesn't really reform what is wrong with system; just adds additional burden to middle income taxpayer like me.

It seems the younger generation is more willing to continue to live with parents until almost physically forced out. I don't think that anything that further encourages that behavior is a good thing.

This is generally a healthy age group and while plan costs could go up by 1%, this is one way to help children transition from college to employment with benefits without the stress of risk without health insurance.

"I've got good healthcare now, but I've been watching costs rising and quality of service falling for the last four years, well before the current healthcare reform began. My faith in government is about the same as my faith in the private sector: There's some good, some bad and plenty of people just moving the paper chains. I think a public option is ultimately good.

I think the experience in get day-to-day will vary with your situation, your tenacity in making sure you're getting what you pay for and whether or not the customer service rep you get on the phone actually a)knows what they are doing; and b)is feeling helpful, or at least, not exhausted."

I'll pretend you didn't ask that question...otherwise I could go on for hours about what a disaster this legislation is for the US economy, individual freedom and privacy, and life as we know it.

It's a necessary evil.

We absolutely plan on raising the cost to cover dependent children since we cannot charge more for those who are qualified young adults, and current thinking is to move to a unit cost per dependent child, so the more children one covers under our plans, the more they will have to pay.

The provision to cover "children" from 23-26 regardless of whether or not they are married, have a coverage option from their own employment or through a spouse is very costly to employers and seems illogical and unfair.

Let's hope that colleges and universities still have the "8-year rule" for graduation that my school maintained in the 1980's.

By the time you reach the age of 26, you're an adult and can pay for your own insurance.

Not ideal, but a step in the right direction.

A bad but, unfortunately, necessary idea due to the state of today's economy.  Unemployment is rampant particularly among those graduating college or graduate schools so they are having a really tough time finding employment based health care coverage.  Fortunately, this demographic's health care expenditures are on the lower end of the spectrum so actual costs will probably be minimal.  It will be, however, an excuse for the insurance companies to jack up rates disproportionally.

I think that it finally helps that age range (18 - 26 year olds) get on their feet.  If they are in college, they are generally unemployed or working part-time and can't get health care.  And for those already in the working world, they need money to pay bills because they have not yet had time to save money for expenses.  Thus, they cannot afford health care.  In most cases, there is no increase or decrease to the employee to keep that child covered when they have a family plan.  I have a son who is able to remain covered under my policy at no extra expense to me and it is allowing him to save money for future expenses.  This is about the only benefit I see the Health Care reform.

It's like having a bad credit score. You got credit but it's worth @#$%.

I have mixed emotions, with kids still attending college, I will take advantage of this change.  But I worry we are failing to require the kids grow up and take responsibility for their own insurance.  I have told them as soon as they graduate, they are off, whether they are allowed to stay on or not!  Time to get off my payroll and on to their own.

An idea that costs everyone more

I anticipate our plan will be covering a few more maternity cases.

Some of our employees will add overage dependents but as a company of about 800, we don't expect the number to be overwhelming.  I'm neutral to this change but wouldn't want to be a large employer since they will most likely have to add a significant number of overage dependents.

From an employers standpoint this will add many people to our plan which will have an impact on our costs, but from a parent of a college student's standpoint, I like it.

I think they need to get off mom and dad's couch and get a life!

I think for some families it has been necessary to provide insurance to young adults who have become unable to work and obtain health insurance through employment.  I don't know if it would be necessary in an environment where affordable health insurance/health care is available to everyone regardless of their employment status.

I would say a very bad idea but I think it is even worse than that. Companies in general are not ecstatic about offering Health care benefits but do so because there is no other viable option for employees currently.  Forcing additional people (dependents), traditionally dependents cost more on healthcare than employees, onto employer plans will increase the likelyhood that starting in 2014 companies will drop all coverage and force employees to the insurance exchanges.

I wish Congress had just enacted this provision and removing pre-existing condition exclusions and left all the other stuff out!

I'm all for it as long as the child is still a student.  Otherwise I have mixed thoughts -  its a good idea as long as it doesn't bring along deliberate deadbeats - such as those who could get their own insurance through work but at a greater cost.   Doesn't seem fair to the company having to bear the insurance cost.

As much as that would've benefited my family when my son lost his coverage on my plan when he graduated from college, I think it's a very bad idea for the government to mandate it...but then, I also think it's a very bad idea for the government to be involved in health care at all!

An interesting broadening of a plan sponsor mandate.  As a parent, I'm happy that my children have grown into productive adults, but am concerned because one does not have employer provided healthcare nad may now not be covered.  From a policy perspective I agree that we need to make better coverage available to all but I'm not sure this is the way to accomplish this.

Establishing a consistent coverage end age levels the playing field between different employer's plans.  The action to establish the end of coverage age is not inherently bad.  However, the other definitions about providing coverage is where the problems for employers come in.

Ir's a great idea if cost were not a concern. Hopefully this will lead to employers paying only for single coverage and requiring employees to pay for their spouses and children. I have long advocated this, as it is not fair to single employees that they "earn" so much less than employees with dependents.

This will help my co-workers who were told that they have to pay COBRA prices to cover their graduating kids.  It doesn't matter how long they may need the coverage.  One was debating whether to gamble her son wouldn't get sick before his own employer insurance kicks in later this year.

I think it's ridiculous that we must offer dependent coverage to the young adults who are married and clearly no longer dependents of their parents. I agree with providing coverage for those dependent adult children still at home and relying on parents (somewhat) up to age 26.

We're spending tens of thousands to project the many millions this will cost us....I have plenty of thoughts.  Good intention...bad ideas and execution.

Didn't anyone look at what happened in Massachusetts? I look forward to higher taxes and lower salary/benefits.

Our actuaries have estimated that this will increase our plan costs by 1.43%--more than the 0.5% to 1.2% estimate in the interim regs.

I'm still on a hunger strike until the Regs come out.

But this week’s Editor’s Choice goes to the reader who responded “!@#&*%^##. Then $%^&*^%$*. Furthermore, *&()^$$ ~!@#$ %^^&* and you little dog,too. Whew, thanks! I needed that.”

Thanks to everyone who participated in our survey!