Benefits & Compensation News

New Obamacare regs: Dependents you no longer have to cover

Delays of the play-or-pay penalties weren’t the only relief to come out of the feds’ final rules on the “shared-responsibility” mandate.

The final rules also include a significant amount of relief in terms of dependent-care coverage.

Originally, for pay-or-play purposes, the feds had defined the term “dependents” to include biological children, stepchildren, adopted children and foster children.

In the final rules, however, the feds define dependent as a child (adopted or by birth) under the age of 26. That means employers can exclude the following individuals from dependent care coverage without being penalized:

  • foster children
  • step children, and
  • children who are not U.S. citizens or nationals, unless the children are residents of a country contiguous to the U.S. — i.e., Canada or Mexico — or who are within a special tax exception that applies to adopted children.

Note: The feds also clarified that plans are required to cover dependents through the entire month of his or her 26th birthday.

Relief until 2016

The regs also touched on extended transition relief that applies to employers that plan to include dependent care coverage in the future but don’t currently do so.

The feds said that any employers that plan to offer dependent coverage in the near future until the start of 2016 to do so — and avoid “shared-responsibility” penalties — as long as they took steps to comply with Obamacare’s dependent coverage requirements in 2015.

However, any employers that eliminated dependent coverage after having offered it during its 2013 or 2014 plan years aren’t eligible for this relief.

The transition relief applies to plans where:

  • dependent coverage is not offered,
  • dependent coverage is offered that does not meet minimum essential coverage requirements, or
  • dependent coverage is offered for some (e.g., biological children), but not all, dependents (e.g., adopted children).
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