Expanding dependent coverage for young adults: lessons from state initiatives

Abstract

The Patient Protection and Affordable Care Act (ACA) requires that adults up to age twenty-six be permitted to enroll as dependents on their parents' health plans. This article examines the experiences of states that enacted dependent expansion laws. Drawing on public information from thirty-one enacting states and case studies of four diverse reform states, it derives lessons that are pertinent to the implementation of this ACA provision. Dependent coverage laws vary across the states, but most impose residency, marital status, and other restrictions. The federal Employee Retirement Income Security Act further limits the reach of state laws. Eligibility for expanded coverage under the ACA is much broader. Rules in some states requiring or allowing separate premiums for adult dependents may also discourage enrollment compared with rules in other states (and the ACA), where these costs must be factored into family premiums. Business opposition in some states led to more restrictive regulations, especially for how premiums are charged, which in turn raised greater implementation challenges. Case study states did not report substantial young adult dependent coverage take-up, but early enrollment experience under ACA appears to be more positive. Long-term questions remain about the implications of this policy for risk pooling and the distribution of premium costs.