Empire State regulators have issued a batch of guidance explaining how carriers should implement a new law that will help residents ages 18 to 29 to get coverage from their parents’ insurers.
The New York State Insurance Department notes in Circular Letter Number 22 (2009) that the state now has 2 types of insurance provisions that apply to unmarried young adults through age 29.
One, the “young adult option” permits “a young adult who has ‘aged off’ of his or her parent’s group or group remittance health insurance policy or contract to independently purchase coverage through the parent’s group policy or contract through the age of 29.”
The other, “make available option,” requires state-regulated carriers to give “group, group remittance or individual policy or contract holders an option to include a young adult through the age of 29 as a dependent under family coverage.”
The provisions do not apply to self-funded group health plans.
A parent must pay the premium for a young adult to use the young adult option, and the young adult can use the option even if the parent does not have family coverage, officials write in the circular letter.
A young adult can get coverage through that mechanism even if the young adult qualifies for Consolidated Omnibus Budget Reconciliation Act health benefits continuation coverage from a former employer, officials write.
“With regard to community-rated policies, the premium for the young adult option must be the group rate for one person under the group policy or contract,” officials write.
Employers and carriers cannot charge an additional 2% administrative fee, as they would for COBRA coverage.
When setting rates for coverage sold through the “make available option,” an insurer should submit a rate filing to the New York department for review, officials say.
“With regard to group and group remittance polices and contracts, an insurer should spread the cost of the coverage among all group or group remittance members with family coverage and not just among the eligible young adults,” officials write.
“With regard to individual and small group policies and contracts, community rating rules apply, and an insurer must spread the cost of the make available option across all policy or contract holders in the rating pool who have purchased family coverage that includes the make available option,” officials write.