Extended dependent coverage likely to raise premiums, say feds

The federal government on May 13 officially published the interim final rules for group health plans, including both insured and self-insured plans, and health insurance issuers in the group and individual markets for covering dependent children to age 26 under the Patient Protection and Affordable Care Act (PPACA). Consumer groups including the National Patient Advocate Foundation in Washington, D.C., praised the new regulations, but actual consumers might not be so pleased if global premium increases come to pass.

Approximately 2.4 million young adults (8 percent of the 29.5 million people in the 19 to 25 age group) could be impacted by the PPACA provision, according to government statistics. Of those, about 1.8 million currently have no insurance, and .6 million have their own non-group coverage. Exactly how many of the 2.4 million young adults who could be impacted actually will enroll on their parents' coverage is a matter of "substantial uncertainty," say the U.S. Departments of Labor, the Treasury, and Health and Human Services. The mid-range estimate is that 1.2 million young adults will enroll in new dependent coverage in 2011, with the number rising to 1.7 million by 2013.

The new rules don't allow health insurers to institute a surcharge for extending coverage to young adults, notes Business Insurance. However, based on the mid-range estimate, the overall average premium cost for individual coverage will be $3,380 in 2011, $3,500 in 2012, and $3,690 in 2013 in response to the PPACA provision. Group premiums will rise .7 percent next year and a full 1 percent by 2012. (2013 is expected to maintain the 1 percent increase.)

The interim final rules apply for plan/policy years beginning on or after Sept. 23. (Comments are due by Aug. 11.) Many health insurers have decided to implement coverage for young adults prior to the Sept. 23 deadline. However, federal workers with adult children currently are excluded from the Sept. 23 implementation because the Federal Employees Health Benefits Program doesn't allow that coverage to take effect prior to Jan. 1, 2011. Sen. Benjamin L. Cardin (D-Md.) has introduced the FEHBP Dependent Coverage Extension Act to provide the young adult coverage to federal workers on Sept. 23, reports the Washington Post.

To learn more:
- read the Federal Register interim final rules
- read the National Patient Advocate Foundation press release
- read this Kaiser Family Foundation summary answering questions about dependent coverage, or this brief explaining how health reform impacts young adults
- read this Business Insurance article
- read this Wall Street Journal article
- read this New York Times article
- check out this HealthReform.gov blog listing of health plans that have extended coverage early
- read this Washington Post commentary

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