1800 Duke Street  Alexandria, VA 22314-3499  +1-703-548-3440 +1-703-535-6490 Fax +1-703-548-6999TTY/TDD  www.shrm.org 

August 11, 2010 

VIA ELECTRONIC MAIL: http://www.regulations.gov 

Office of Health Plan Standards and Compliance Assistance 

Employee Benefits Security Administration 

Room N-5653 

U.S. Department of Labor 

200 Constitution Avenue, N.W. 

Washington, DC 20210 

Re: RIN 1210-AB41 

 Comments on the Interim Final Rules for Group Health Plans and Health 

Insurance Issuers Relating to Dependent Coverage of Children to Age 26 Under the 

Patient Protection and Affordable Care Act 75 Fed. Reg. 27122 (May 13, 2010)

This letter responds to the request for comments by the U.S. Departments of Health and 

Human Services, Labor and the Treasury (Agencies) regarding the May 13, 2010, Interim Final 

Rules (Rules) for Group Health Plans and Health Insurance Issuers Relating to Dependent 

Coverage of Children to Age 26 Under the Patient Protection and Affordable Care Act (PPACA). 

These comments are submitted by the Society for Human Resource Management (SHRM). 

SHRM is the world’s largest association devoted to human resource (HR) management. 

Representing more than 250,000 members in over 140 countries, SHRM serves the needs of HR 

professionals and advances the interests of the HR profession. Founded in 1948, SHRM has more 

than 575 affiliated chapters within the United States and subsidiary offices in China and India. 

SHRM members provide both insured and self-insured health benefit plans to employees 

and family members, and have extensive knowledge and experience with such programs. These 

comments are intended to assist the Agencies in understanding the issues that may arise under 

these Rules and to make some suggested changes. 

SHRM respectfully submits the following comments to the Rules in the following areas: 

 Definition of a Child 

 Inapplicability to Retiree-Only Plans 

 Enrollment Periods that Coincide with Open Enrollment 

 Small Organizations 
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I. Definition of a Child 

The Internal Revenue Service (IRS) released Notice 2010-38 on April 27, 2010 to provide 

guidance on the tax treatment of health coverage provided to adult children under age 27. Notice 

2010-28 provides that for purposes of the tax treatment, the IRS is using the definition of a child 

contained in Code section 152(f)(1). Under Section 152(f)(1), a child is an individual who is the 

son, daughter, stepson, or stepdaughter of the employee, and also includes both legally adopted 

individuals of the employee and individuals who are lawfully placed with the employee for legal 

adoption and legally placed foster children. 

The Rules, in defining coverage requirements, do not contain a similar definition of a child. 

The Rules do, however, allow plans to determine eligibility based on the relationship between a 

child and the participant, which would seem to allow a plan to follow the definition in Code section 

152(f)(1). However, it is unclear whether a plan that prior to the law voluntarily covered 

individuals (such as nieces and nephews) who do not fall under the Code section 152(f)(1) 

definition of a child would have to now cover those individuals to age 26. To provide clarity and 

consistency on this issue, SHRM requests that the Agencies follow the definition of a child in Code 

section 152(f)(1). 

II. Inapplicability to Retiree-Only Plans 

When the Rules were released in May, neither the preamble nor the regulatory text 

addressed the issue of whether retiree-only plans that cover dependents would also be required to 

offer coverage to children up to age 26. It was not until the interim final regulations addressing 

grandfathered health plan status were issued a few weeks later that the issue of whether the PPACA 

group market reforms apply to retiree-only plans was addressed. The preamble to the grandfather 

rule states that retiree-only plans that cover less than two participants who are current employees 

are not subject to the PPACA group market reforms added to Part 7 of ERISA. This was 

subsequently confirmed on June 28 when the Agencies released the interim final regulation 

implementing the PPACA patient’s bill of rights. 

Because the requirement to provide coverage to adult children to age 26 was added to Part 7 

of ERISA, it follows that this provision does not apply to retiree-only plans. SHRM requests that 

the Agencies confirm and clarify that this adult child coverage requirement under section 2714 of 

the PPACA does not apply to retiree-only plans with less than two participants who are current 

employees. 

III. Enrollment Periods that Coincide with Open Enrollment 

The Rules provide transitional relief for a child whose coverage ended, or who was denied 

coverage (or was not eligible for coverage) under a group health plan or health insurance coverage 

because, under the terms of the plan or coverage, the availability of dependent coverage of children 

ended before the attainment of age 26. The Rules require a plan or issuer to give such a child an 
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opportunity to enroll that continues for at least 30 days (including written notice of the opportunity

to enroll) but also allow plans to use their existing annual open enrollment period to satisfy this 

enrollment opportunity requirement. 

Most plans operate on a calendar year basis, meaning that open enrollment will begin in the 

fall of 2010 for the plan year beginning January 1, 2011. Any plan changes, including compliance 

with the PPACA provisions will be communicated to employees well in advance of the start of 

open enrollment. This provides employees with the opportunity to ask any questions about their 

benefits as well as make any determinations regarding the benefits they plan to enroll in for the 

following year, whether it be flexible spending arrangement contribution amounts, the addition of 

life insurance benefits, or any other changes made each year. SHRM believes that because benefit 

changes are communicated well in advance of the start of open enrollment, employees will have 

ample time to decide whether to elect coverage for their adult children, whether those children are 

eligible for coverage and which parent’s plan to enroll the child in if the spouse has employerprovided coverage as well. Therefore, the 30-day open enrollment period places an undue 

administrative burden on plan sponsors and does not convey a significant benefit to the employee 

or adult children. 

For those plans that provide the transitional enrollment opportunity in conjunction with 

their existing annual open enrollment period, SHRM suggests that the enrollment period be no 

longer than the regular open enrollment period. 

IV. COBRA Coverage Considered “Other Employer Coverage” 

The statute and Rules provide that for plan years beginning before January 1, 2014, a group 

health plan that maintains grandfathered health plan status may exclude an adult child who has not 

attained age 26 if the child is eligible to enroll in an employer-sponsored health plan other than the

group health plan of the parent. Although the Rules address the situation where the adult child 

“ages out” of eligibility under his/her parent’s plan and then elects COBRA coverage, the Rules do 

not address the situation where an adult child under age 26 is eligible for COBRA through his/her 

own former employer. 

In the latter situation, SHRM requests that the Agencies clarify that if an adult child under 

age 26 is eligible for COBRA through his/her own former employer, a grandfathered health plan 

may exclude the adult child from coverage under his/her parents’ plan until he/she exhausts 

COBRA. This clarification would be consistent with the HIPAA special enrollment rules that 

provide a special enrollment right only to COBRA enrollees who exhaust their COBRA coverage. 

V. Small Organizations 

According to the preamble, because the Rules are exempt from the Administrative 

Procedures Act, the Regulatory Flexibility Act does not apply and the Agencies are not required to 

either certify that the regulations would not have a significant economic impact on a substantial 
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number of small entities or conduct a regulatory flexibility analysis. However, the Agencies 

encourage public comments that suggest alternative rules that accomplish the stated purpose of 

section 2714 of the PPACA and minimize the impact on small entities. 

SHRM appreciates the Agencies’ recognition that small entities can be significantly 

affected by law changes that may not similarly affect larger entities. SHRM notes, however, that 

small employers may not have the resources to engage in this undertaking at the same time that 

they are also trying to absorb and understand the many changes made by the PPACA as well as the 

regulations that have been issued to date implementing the new law. SHRM therefore suggests that 

the Agencies consider other ways of encouraging small entities to provide input and a reasonable 

time frame in which to do so, which may be longer than would be required for larger entities. 

In closing, SHRM and its members appreciate the Agencies’ efforts to issue guidance on 

this important provision in a timely manner. We appreciate the opportunity to assist the Agencies 

in continuing to develop guidance on this important issue. If you wish to discuss any aspect of 

these comments, please contact Nancy Hammer at (703) 535-6030. 

Respectfully submitted, 

Nancy Hammer 

Governmental Affairs 

Society for Human Resource Management