August 10, 2010

Office of Consumer Information and Insurance Oversight 

Department of Health and Human Services

Attention: OCIIO-4150-IFC

P.O. Box 8016

Baltimore, MD 21244-1850

Re: Dependent Coverage of Children to Age 26 Interim Final Rule

File Code OCCIIO-4150-IFC

Submitted via eRulemaking Portal: www.regulations.gov

Dear Sir or Madam:

I am writing on behalf of America’s Health Insurance Plans (AHIP) to offer comments in

response to the interim final rule (IFR) concerning Dependent Coverage of Children to Age 26 

published in the Federal Register on May 13, 2010 (75 Fed. Reg. 27122). The IFR implements 

Section 2714 of the Patient Protection and Affordable Care Act (the “Affordable Care Act”), 

which was signed into law March 23, 2010.1

AHIP is the national association representing approximately 1,300 health insurance plans that 

provide coverage to more than 200 million Americans. Our members offer a broad range of 

health insurance products in the commercial marketplace and have demonstrated a strong 

commitment to participation in public programs.

AHIP’s members are committed to implementation of the Affordable Care Act and support 

efforts to expand coverage to the uninsured, particularly dependents that may otherwise lose 

coverage because of their age. The expansion of coverage in the group and individual markets 

under this circumstance helps meet a vital need for young adults who may not otherwise have 

access to affordable health care coverage. 

Many members of our community have voluntarily agreed to make the extension of coverage 

available prior to the effective date of the requirements, and we thank the Secretary for 

recognizing these efforts in the materials that accompanied the release of the IFR. As noted in 

the FAQs, this early implementation will help avoid gaps in coverage for new college graduates 

 1 Pub. L. No. 111-148, as amended by Pub. L. No. 111-152.
August 10, 2010

Page 2

and other young adults that could otherwise occur before the IFR’s effective date for plan or 

policy years beginning on or after September 23, 2010. 

AHIP’s members also support the approach taken under the IFR that establishes a special 

enrollment period for dependents, recognizing that a structured process for enrollment aids in a 

smooth transition for the expansion of coverage. In addition, a structured enrollment approach is 

easier, as various reforms take effect, for consumers to understand and navigate. 

AHIP’s comments below are intended to support the successful implementation of the expansion 

of coverage for dependents, while, at the same time, minimizing disruptions for consumers and 

other unintended consequences. 

I. Clarify the Consideration of Age in Determining Premiums in the 

 Individual Health Insurance Market

The Affordable Care Act requires group health plans and health insurance issuers offering group 

or individual coverage that provides dependent coverage of children to make such coverage 

available for an adult child until 26 years of age. The statute does not address how premiums 

must be calculated. 

The IFR states that the terms of a health plan or health insurance coverage cannot vary based on 

age, and gives an example under which a group health plan cannot effect a premium “surcharge” 

for children who are older than age 18. The IFR also provides that a child enrolling during a 

special enrollment period under group coverage, providing that such a child cannot be required 

to pay more for coverage than a “similarly situated” individual who did not lose coverage by 

reason of cessation of dependent status. The examples illustrating the latter provision address 

group coverage only.

The IFR provides no examples of how the above provisions are to be construed with respect to 

coverage in the individual market. In the individual market, as permitted in most states today, 

premiums for family coverage take into consideration the ages of the family members covered 

under the policy. Further, it does not appear to be the intent of the IFR to preempt existing state 

laws with regard to rating in the individual market. As such, we believe that the IFR does not 

prohibit consideration of age in establishing premiums in the individual market, so long as a 

“surcharge” is not imposed on dependents older than 18, and so long as a young adult enrolling 

during the special enrollment period under the IFR is not required to pay more than a “similarly 

situated” individual who did not lose coverage because of cessation of dependent status.

AHIP recommends clarification that the IFR does not preempt existing state laws with 

respect to rating in the individual market and allows, to the extent permitted under state 

law, the consideration of age in establishing premiums in the individual health insurance 
August 10, 2010

Page 3

market, thereby avoiding unintended premium increases and disruptions for consumers.

II. Recognize That Certain Benefits May be Appropriately Provided on an AgeSpecific Basis 

As noted above, the IFR states that the terms of a plan or health insurance coverage providing 

coverage for dependents may not vary based on age. Many benefits are provided on an agespecific basis, as may be required under either federal or state law. The Affordable Care Act 

itself requires coverage of certain preventive services without cost-sharing, and, in construing 

this requirement; the Interim Final Rules for Coverage of Preventive Services2 relies on 

recommendations from the United States Preventive Services Task Force, the Advisory 

Committee on Immunization Practices of the Centers for Disease Control and Prevention, and 

the Health Resources and Services Administration. These bodies make recommendations based 

on in-depth, impartial expert review and assessment of scientific evidence. The 

recommendations include a broad range of preventive clinical services and are often based on 

age. The requirement to provide coverage for these scheduled services becomes effective for 

plan or policy years beginning on or after September 23, 2010. In addition, many states have 

enacted requirements to provide benefits on an age-specific basis.3

 

We do not believe it is the intent of the IFR for Dependent Coverage of Children to Age 26 to 

displace the requirements under federal and state law for age-specific benefits. Allowing 

employer and health insurance plans to continue to provide age-specific benefits in compliance 

with these requirements will avoid unintended increases in premiums and help keep coverage 

affordable. 

To harmonize requirements for the coverage of preventive and other age-specific services, 

AHIP recommends clarification that the IFR continues to allow employer and health 

insurance plans to provide age-specific preventive and other benefits, as necessary to 

comply with federal and state benefit requirements.

III. Define Dependent for Purposes of the IFR

The Affordable Health Care Act gives the Secretary authority to promulgate regulations to define 

the dependents to which coverage shall be made available. The IFR discusses the conditions 

under which coverage must be extended to dependents and speaks to the relationship between a 

child and the participant or subscriber, but does not define the term “child.” In discussing the 

conditions of coverage, the preamble states that certain factors, such as financial dependency on 

 2 75 Fed. Reg. 41726 (July 19, 2010).

3 Many states require coverage of various preventive services based on age. In addition, states also require coverage 

of non-preventive services, such as general anesthesia and associated facility charges for dental procedures, based on 

age.
August 10, 2010

Page 4

or residency with a parent, are no longer appropriate for adult children. The preamble then goes 

on to conclude that because the statute does not distinguish between minor and adult children, 

these factors cannot be used for eligibility for minor children. 

While the Affordable Care Act does not distinguish between minor and adult children, it does 

state that the Act should not be construed to modify the definition of “dependent” under the 

Internal Revenue Code (IRC) with respect to the tax treatment of the cost of coverage. The 

Internal Revenue Service Notice 2010-38 (Notice) clarifies the tax treatment of employersponsored coverage for children who turn age 27 during a given tax year. In doing so, the Notice 

defines “child” to be a child within the meaning of IRC section 152(f)(1), which defines a child 

as an individual who is a son, daughter, stepson, or stepdaughter, and includes both an adopted 

child and an eligible foster child.

Not included in the IRC definition are other children, e.g., grandchildren and custodial children. 

Similarly, the IFR recognizes that it does not require coverage for a child of a child, i.e., a 

grandchild, but is silent on other children. 

Fully adopting the current IRC definition of “child” as the definition for “dependent” would 

provide certainty to the scope of the IFR requirements, while allowing long-standing conditions 

of coverage to continue to apply to additional type of dependents. For example, some employer 

and health insurance plans provide, and some states require, coverage for grandchildren, but only 

if the grandchild lives with and receives financial support from the enrollee. We do not believe it 

was the intent of the Affordable Care Act to negate or preempt these types of requirements with 

respect to these broader categories of dependents. 

In addition, some employer and health insurance plans voluntarily extend coverage to broader 

categories of dependents, including nieces, nephews and other relatives, under circumstances 

where the dependent lives in the enrollee’s home and relies on the enrollee for support. These

“custodial” requirements are a well-established way to extend coverage to children who are 

dependents, without making such an expansion unworkable and unaffordable. Unfortunately, 

not allowing these and other criteria that support broader coverage of dependents could cause 

some employers and insurers to be unwilling to continue to extend this type of coverage, 

thwarting the intent to expand access. 

To avoid making coverage less affordable and unintentionally causing some dependents to 

not be considered eligible for coverage, AHIP recommends that the definition of 

“dependent” be clarified to mean the same as a “child” as defined under the IRC section 

152(f)(1). 

In addition, we request acknowledgement that the IFR applies to comprehensive, major medical 

coverage, and not to the benefits classified as “excepted benefits” under subsection 2791(c) of 
August 10, 2010

Page 5

the Public Health Service Act. The intent to apply the Affordable Care Act’s market reform 

provisions has been previously acknowledged for the new Internet portal and in the preamble of 

the Interim Final Rules for Grandfathered Health Plans, and we ask that the same recognition 

also be made with respect to this IFR. 

AHIP remains committed to our continued collaboration and dialogue and stands ready to 

provide information and support for the effective implementation of the extension of coverage 

for dependants to age 26. We appreciate the opportunity to comment on this important 

expansion of access to coverage.

Sincerely,

Jeffery L. Gabardi

Senior Vice President, State Affairs