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Changes to Maryland's Health Insurance Laws Effective January 1, 2008 - Coverage Until a Dependent Turns Age 25

Effective January 1, 2008, an insured employee’s dependent, up to (i.e. younger than) the age of 25, can now remain as a dependent under the employee’s health insurance policy without having to be a full-time student. The terms of the individual health insurance policy will determine when coverage terminates - it could be on the dependent’s 25th birthday or at the end of the month, quarter, policy year, etc. in which the dependent turns age 25. Under prior law, a dependent’s coverage generally terminated at the end of the year in which he/she turned age 19, unless he/she was a full-time student, in which case coverage continued until the end of the year in which he/she turned age 23.

The new law is effective for health insurance policies which are issued or renewed in the State of Maryland on or after January 1, 2008, and generally, only applies to employers with 51 or more employees. The law does not affect federal plans or programs, ERISA governed self-insured health plans, or life, disability, long-term care, credit, or AD&D insurance. Nor is it applicable to insured dental, vision, Medicare supplement, disease specific (i.e., cancer insurance), travel accident or sickness coverage, and certain types of indemnity coverage, to the extent that such benefits are provided in a separate contract.

Under the new law, to qualify for health coverage until he/she reaches age 25, an individual must be unmarried and must be:

  • the natural or adopted child, stepchild, or grandchild of the insured employee; a child who is placed with the insured employee for legal adoption; or a child under testamentary or court appointed guardianship, other than temporary guardianship for less than 12 months, of the insured employee, and

  • a “dependent” of the insured employee for federal income tax purposes. This means that the individual must be either a “qualifying child” or a “qualifying relative” of the employee.

Generally, a “qualifying child” is a natural or adopted child, stepchild, grandchild or foster child of the insured employee who must: (a) live with the employee for more than one-half of the year; (b) be age 18 or younger or be a full-time student under age 24 as of the close of the calendar year; and (c) not provide over one-half of his or her own support for the year.

Generally, a “qualifying relative” is a child, grandchild, stepchild, adopted or foster child who is not a “qualifying child” of the insured employee or anyone else, and who receives over half of his support for the year from the employee.

An employer may be required, pursuant to the terms of its health insurance policy, to notify the insurance carrier when an insured dependent reaches age 25 or no longer meets the definition of a dependent under the insurance policy. Therefore, an employer should require its employees to certify at the time of enrollment and during each subsequent open-enrollment period: (i) the age of each dependent and (ii) that he/she will claim the insured dependent as his/her dependent for federal tax purposes for the relevant year.

For more information please contact:

Matt MellinBob Kellner