Posts Tagged ‘reform’

Health Insurance for Adult Children? Not so fast…

May 18, 2010

In late April I blogged about the new health reform law that goes into effect Sept. 23 allowing parents to keep an adult child on their health plan until age 26. But, what many people – my wife and me included – did not realize is that the new rules allow employers to wait until the start of the next plan year (typically January 1) before allowing parents to add adult children to their coverage.

We discovered this while looking into a short-term insurance policy for our 24-year-old son who is impacted by this law. We were quite surprised to learn the law is different than we first thought.

The period of time during which the new graduate will not have health insurance could be longer than first anticipated. Check with your insurance company or the administrator of your insurance plan to see if they are offering coverage during this gap. Even before the new rules kick in, many insurers are allowing graduating students to remain on their parents’ policy, but if your graduate will be dropped upon graduation, be sure to get a short-term insurance policy for them to cover the gap. Health insurance for young adults is relatively inexpensive. A policy with a high deductible for someone in their 20s can cost less than $100 a month in Wisconsin.


Health Care Reform: Health Insurance for Adult Children to Age 26

April 23, 2010

Effective September 23, 2010, the Patient Protection and Affordable Care Act requires group health plans and health insurers (who offer group or individual policies which cover dependents) to cover adult children on a parent’s plan until the child’s 26th birthday.   This has been trumpeted recently in the press, but there are a couple of things you need to know.

The child does not have to be a student or a dependent for tax purposes.  The insurance is not taxable to the child.  The term “adult child” for purposes of this requirement means a son, daughter, stepson, stepdaughter, or legally adopted or eligible foster child of the employee or insured. If your adult child has a child, there is no requirement to make coverage available to your grandchild.  Until 2014, this is only applicable to children who are not otherwise eligible to enroll in an employer-sponsored health plan.  If they are eligible, then they must use that insurance plan.

That it doesn’t go into effect until September presents problems for families with spring graduates.  There will be a period of time during which the new graduate will not have health insurance (between graduation and September 23rd).  Check with your insurance company or the administrator of your insurance plan to see if they are offering coverage during this gap.  Some insurance companies and plans are offering coverage because they are realizing the hassle and cost of dropping the new graduate and then re-enrolling them on September 23.  If your graduate will be dropped upon graduation, then be sure to get a short-term insurance policy for them to cover the gap.  Don’t take the risk.

Many states have existing laws which require insured plans to provide similar or more expansive coverage of dependents.  This new federal law will not change them and they will continue to apply.  Wisconsin is not one of those states.

Estate Tax Reform Update

April 6, 2010

You may be interested in the April 1 AALU Bulletin (No: 10-37), Update on Estate Tax Reform: Developments and Dynamics, which states that three factors shape the ongoing environment for the federal estate tax:

  1. A packed congressional schedule;
  2. A focus on deficit reduction; and
  3. The upcoming mid-term elections.

The AALU concludes that we may have a clearer picture once Congress returns to session this week but that the Senate may be hesitant to pass a reconciliation bill (which could include the estate tax) because of the recent health care reconciliation bill. If it is not included in a reconciliation bill (which requires only 51 votes), 60 votes would be necessary to pass estate tax legislation:

“The difficulty in finding 60 votes may lead to either (1) reversion in 2010 to a $1 million exemption and 55% rate or (2) a short-term extension of tax cuts, including the estate tax on a two-year basis at $3.5 million exemption and 45% rate, possibly during a lame duck session (when Congress returns after November elections).”

A copy of the complete bulletin is available online here.

Estate Tax Reform

January 6, 2010

There’s another fine mess you’ve gotten us into…

You can hardly pick up a newspaper right now without reading about the estate tax mess we’re in.

There are winners and losers. The Economic Growth and Tax Relief Reconciliation Act of 2001 lowered estate taxes and eliminated them entirely in 2010.

Unfortunately, Congressional budget rules required the act to have a sunset provision, which means the entire act would disappear on December 31, 2010. Then we would be back where we started in 2001 – no reform. But who cared in 2001? There were nine years to address the problem.

Well, here we are in 2010 and Congress has done nothing. Right now there are all sorts of predictions, but no one really knows what will happen. The question is what to do with people dying in 2010, before new legislation is enacted? Many in Congress want to adopt legislation in 2010 and make it effective retroactive to January 1, 2010, but that may be unconstitutional.

Regardless, you need to review your estate plan now, especially if you are in a second marriage, have a marital trust and/or family trust.  Otherwise your plan might not work as you intended.

Only put off until tomorrow what you are willing to die having left undone. – Pablo Picasso

For more detailed information, you can read our latest Wealth Counselor newsletter, Planning After “Repeal” of the Federal Estate Tax, available here.

(Swendson/Menting Law Ltd. offers this free monthly newsletter to our clients, friends and strategic partners that addresses current issues and developments in the law. If you would like to receive future editions, please contact us.)