Understanding When a Child is Treated as Age 26 for ACA Eligibility Purposes Under Parents' Plans

When a group health plan offers dependent coverage, that plan must continue to cover an employee's child until the child turns 26--regardless of the child's dependent status or employment status. Technically, the plan only must cover the child until the day before their 26th birthday. However, the plan could potentially face ACA penalties if the employer is an applicable large employer and they fail to cover the child until the last day of the month when the child turns 26. ACA penalties apply to employers with 50 or more full-time employees who do not offer coverage to employees and their dependents. Dependents include an employee's child who is under 26--and regulations implementing the ACA penalty provide that a child is considered a dependent for the entire month in which they turn 26. For more information on the employer mandate, visit Tax Facts Online. Read More: Link to Q8871.