One of the selling features of the Affordable Care Acts was that children could stay on their parent’s health plan until they turned 26 years old. Unfortunately, Covered California excludes from eligibility any household member that will not be claimed as a dependent by the primary taxpayer associated with the account. However, IRS guidance suggests that young adults under 26 who will be required to file a federal tax return can be on the family plan.
Independent child listed as tax dependent
This little quirk of excluding young adults from family plans was brought to my attention by a tax payer who was dutifully attempting to move forward with starting his 2014 tax return. This gentleman had included his 22 year old son as a household member on his Covered California. The son, who lives at home, has a job with wages that will require him to file a federal tax return. The conflict he encountered was that he could not take his son as dependent on his taxes but he had included him in the Covered California household and received Advance Premium Tax Credits based on that household size.
Healthcare.gov lists eligible independent adults
Undoubtedly the number of households who incorrectly included a household member for whom they will not be able to claim as a dependent will be small. But the Covered California online enrollment CalHEERS program won’t allow a family to include a child over 18 unless they are claimed as a dependent. The Healthcare.gov website clearly indicates that eligible age children can be on even if they are not financially dependent on their parents.
IRS includes independent young adults
Additionally, the IRS confirms a similar situation when it comes to the family receiving a 1095-A Statement of Advance Premium Tax Credits to be reported on the federal tax returns.
Form 1095-A (2014) Page 2
If you attested to the Marketplace at enrollment that one or more of the individuals who enrolled in the plan are not individuals for whom you intend to claim a personal exemption deduction on your tax return, and advance credit payments were made, then the information reported on Form 1095‐A applies only to the individuals for whom you attested the intention to claim a personal exemption deduction (yourself, spouse, and dependents). For example, if you indicated to the Marketplace at enrollment that an individual enrolling in the policy is your adult child for whom you will not claim a personal exemption deduction, that child will receive a separate Form 1095‐A and will not be listed in Part II on your Form 1095‐A.
Covered California excludes independent young adults
Covered California has never given, to my knowledge and experience, any opportunity on their paper applications or online enrollment system, the ability of a primary applicant to include their eligible adult child on the household plan without being declared a dependent. Covered California has steadfastly insisted that children, or other adults, can only be a member of the household if the primary tax filer claims a personal exemption deduction for them on their federal tax return.
Tax dependent references from Covered California
- For a Covered California health plan, as long as students are a tax dependent of their parent(s) or under the age of 26, their eligibility for student health coverage does not make them ineligible to be covered on their parent’s family health plan. – http://www.coveredca.com/individuals-and-families/special-circumstances/students/
- Employer and income information for everyone in the consumer’s family. A family is defined as the person who files taxes as head of household and all the dependents claimed on that person’s taxes. – http://www.coveredca.com/individuals-and-families/getting-covered/application-process/
Covered California consistent in denying young adults
Whenever I attempted to include an eligible young adult as a member of a household plan they were always determined ineligible for tax credit assistance. Customer service representatives at Covered California verified that only dependents could be included in the household for tax credits.
Who is correct: IRS or Covered California?
Either the IRS is wrong or Covered California is wrong when it comes to adding non-dependent age eligible dependent children to a family health insurance plan purchased through Covered California. From the perspective of the software programming and tracking, I can see why Covered California didn’t want to tackle a potentially complicated database issue. But if the ACA says that young adults can be on their parent’s health insurance, even if the parents don’t claim the child as a dependent, then Covered California needs to accommodate those situations and change their enrollment system and rules.
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