1310 G Street, N.W. 

Washington, D.C. 

20005 

202.626.4780 

Fax 202.626.4833 

August 11, 2010 

The Honorable Kathleen Sebelius, Secretary, U.S. Department of Health and 

Human Services 

The Honorable Hilda Solis, Secretary, U.S. Department of Labor 

The Honorable Timothy Geithner, Secretary, U.S. Department of the Treasury 

Attention: OCIIO-9991-IFC 

Room 445-G, Hubert H. Humphrey Building 

200 Independence Avenue, S.W. 

Washington, DC 20201 

Via Regulations.gov, RIN 1210-AB41 

RE: Comments on the Interim Final Rules Relating to Dependent Coverage 

of Children to Age 26 under the Patient Protection and Affordable Care 

Act 

Dear Secretaries Sebelius, Solis, and Geithner: 

The Blue Cross and Blue Shield Association (“BCBSA”), which represents the 39 

independent, community-based and locally operated Blue Cross and Blue Shield 

Plans (“Plans”), is pleased to submit comments on the interim final rule (the 

“Rule”) for dependent coverage to age 26 under the Affordable Care Act (“ACA”), 

as published in the Federal Register on May 13, 2010 (75 Fed. Reg. 27122), to the 

Departments of Health and Human Services, Labor, and the Treasury (the 

“Departments”). 

Blue Cross and Blue Shield Plans collectively provide healthcare coverage for 

nearly 100 million people, or one-in-three Americans, in all 50 states, the District of 

Columbia, and Puerto Rico, and in all markets, including the individual, small 

group, large employer, and national account markets. Plans also participate in 
August 11, 2010 

Page 2 of 4 

government programs, such as Medicare, Medicare Advantage, Part D, and the 

Federal Employees Health Benefits Program. 

Recognizing that many young people could lose their coverage because of their 

age, student status, graduation from school or other factors prior to this provision 

going into effect, BCBS Plans voluntarily agreed to offer coverage to adults under 

age 26 on health insurance policies their parents purchased through the individual 

market, effective June 1, 2010. Our Plans also offered the early extension to their 

employer accounts. 

We look forward to continuing to work with the Administration on implementation of 

this provision and offer the following three recommendations: 

1. Clarify the Definition of “Child” 

Issue: Prior to ACA, health benefits were not taxable for dependents who were 

considered “qualified children” or “qualified relatives” under Internal Revenue Code 

(“IRC”) § 152. A “qualified child” was defined as a legal child, foster child, or 

stepchild up to age 24 (where a full-time student), and a “qualified relative” was 

any other person, regardless of age, for whom the employee provided over onehalf of his or her support. Based on these definitions, many Plans had required 

that a dependent child either be a “qualified child” or be a tax dependent of the 

subscriber or the subscriber’s spouse so that the Plan did not have to impute 

income on benefits for these dependent children. 

The Rule requires that, to the extent a Plan covers a “child,” it must do so to age 

26, without further conditions such as tax dependency. This could discourage 

some Plans from covering additional classes of children because the tax treatment 

of children within the group would be inconsistent and potentially confusing. The 

Rule does not define “child,” so there is some uncertainty as to how broadly this 

term should be applied. Following the enactment of ACA, the IRS issued new 

guidance (IRS Notice 2010-38), that increased the age for a “qualified child” up to 

age 27, but did not address other relationships that could entitle a dependent to 

coverage (e.g., legal guardianship, qualifying grandchildren, domestic partners’ 

children). This means that the term “child” could be read broadly so that when a 

Plan voluntarily covers a “child,” and that “child” does not meet the “qualified child” 

definition under IRC § 152(f), the Plan may not be able to require tax dependency. 

This in turn means that the Plan will have to impute income where these children 

are not qualified relatives. 

This issue may also be viewed from an underwriting perspective. If insurers are 

not permitted to consider the relationship between an insured and an individual 

who is a grandchild, ward, etc., they may no longer extend coverage to these 

individuals. This result is contrary to the goal of ACA to increase the number of 

insured individuals. 
August 11, 2010 

Page 3 of 4 

Recommendation: The final rule should provide that the requirement to cover a 

dependent child to age 26, without additional conditions, only applies to a “child” 

as used in the “qualified child” definition in IRC § 152(f). This reading would be 

consistent with the express carve-out in the statute and regulation providing that a 

Plan does not have to extend coverage to grandchildren, who are not “qualified 

children” under IRC § 152(f). The final rule should clarify that if a Plan voluntarily 

chooses to extend coverage to other classes of dependent children outside of the 

definition of “qualified child” in IRC § 152(f), the Plan may impose additional 

conditions (such as tax dependency) with respect to these individuals. 

2. Allow Age-Appropriate Benefits 

Issue: Plans often offer and deliver different types of benefits or screenings 

based on various demographic characteristics, including gender or age, according 

to medical standards. For example, well-child screening (also known as well-baby 

visits) and certain immunizations may be covered based on the age of the 

individual, or certain copayments may be eliminated for children under age 19 to 

encourage the use of certain services (e.g., primary care physician visits). The 

Rule provides that a plan or issuer cannot vary benefits based on age. Plans 

should be permitted to continue to administer and pay for benefits using evidencebased standards where medically necessary, including those based on the age of 

the covered individual. 

Recommendation: The final rule should clarify that, while a Plan may not vary 

eligibility for a certain benefit plan based on a dependent child’s age, a Plan may 

administer benefits using evidence-based standards that vary based on age. 

3. Clarify that Individual Market Premiums Can Vary by Age

Issue: The Rule prohibits premium increases based on the age of the child, but 

allows premium changes based on classifications such as “self-plus-one, self-plustwo,” etc., 29 C.F.R. § 2590.715-2714(e). The examples in the Rule are oriented 

toward group coverage where participants and dependents do not pay different 

rates that vary by their ages and the examples are not specific to coverage offered 

in the individual market. 

In the individual market, premiums frequently are based on the ages of the family 

members covered under a family policy. If the Rule were read to prohibit age 

rating with respect to children in the individual market, it would be a major change 

given that the practice currently is permitted in almost all states. Furthermore, 

ACA sets forth the permissible age variations that will apply to individual market 

premiums effective January 1, 2014. Public Health Service Act § 2701. 
August 11, 2010 

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Recommendation: The final rule should clarify that insurers can vary individual 

market premiums by age, as otherwise permitted by law, as long as the insurer 

applies the same age rating rule uniformly regardless of an individual’s status as a 

dependent. 

* * * * * 

We appreciate your consideration of our comments and recommendations on the 

adult child coverage extension Rule. We look forward to continuing to work with 

the Departments on implementation issues related to the ACA. If you have any 

questions, please contact Kris Haltmeyer at (202) 626-4814 or at 

kris.haltmeyer@bcbsa.com. 

Sincerely, 

Justine Handelman 

Executive Director, Legislative and Regulatory Policy 

Blue Cross Blue Shield Association