Covered California has released guidance on the rules and conditions for adding a parent or stepparent to your application for health insurance.
New in Benefit Year 2023: Parent and Stepparent as Dependents
Effective January 1, 2023, a new California law expands the definition of “dependent” for the purposes of enrollment in a Qualified Health Plan (QHP), to include a parent or stepparent of a qualified consumer. Rules for this benefit include that a dependent parent or stepparent must:
- Meet the definition of a “Qualifying Relative” under Internal Revenue Service (IRS) rules.
- In general, a dependent parent or stepparent is a Qualifying Relative when their annual gross income is very limited (e.g., $4,300 for 2021 tax year), and the primary taxpayer provides over one-half of the parent or stepparent’s total support during the tax year and claims them as a tax dependent.
- Live in the health plan’s service area – carriers will be required to provide coverage if the qualifying dependent lives in the carrier’s service area.
- Be part of the same tax household as the adult child or their spouse who is the primary tax filer.
- Be enrolled with their adult child or stepchild in the plan – the enrolled adult child can enroll their parents or stepparents in the same plan but cannot enroll their in-laws unless their spouse is also enrolled in the plan.
- Be enrolled with their adult child or stepchild in the plan – the enrolled adult child can enroll their parents or stepparents in the same plan but cannot enroll their in-laws unless their spouse is also enrolled in the plan. [Seems to be a duplicate of the point above.]
- Not be eligible for Medi-Cal.
- Not be eligible for Medicare, enrolled in Medicare, or identified as enrolled in Medicare through the Federal Data Services Hub.
Additional questions regarding the IRS rules should be referred to a tax professional.
Please note: Qualified Dental Plans (QDP) are not included in this law.
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Rules That May Exclude Adult Dependent on Covered California
From the Covered California guidance, the adult child or stepchild must also be enrolled in a Covered California health plan. Some adult children, who have employer sponsored health insurance, had inquired about enrolling their parents – they take as tax dependents – in a Covered California health plan.
The guidance indicates that the adult child related to the adult dependents must also be a Covered California enrolled member. This would preclude adults with employer sponsored health insurance, Medi-Cal, or Medicare from enrolling their parents in a Covered California health plan with the subsidies based on the household income.
Additionally, from a strict reading of the guidance, adult dependents cannot be in a different health plan from adult child. With Covered California, we can normally split family members onto to different metal tier plans with different carriers. If we are to adhere to the above conditions, the adult parent or stepparent must be enrolled in the same health plan as their related adult child or stepchild.