Helping Employees Understand Over Age Dependent Coverage

September is the month where many young adults across Canada head to colleges and universities to continue their education. As the school season begins, employees will want to know what steps they need to take to ensure their children over 21 (technical term is Over-age Dependent) are still covered under their employee benefits package.

As the person responsible for benefits administration in your company, it is your duty to keep employees informed and up-to-date. When employees' dependent children reach a certain age, they may lose their coverage. We have collected all the necessary information regarding overage dependents, so you can avoid unpleasant situations and protect your employees' families.

Family benefits coverage for dependents and spouses in Canada can include the following:

1. Medical Services Plan
2. Extended Health benefits
3. Dental benefits
4. Employee and Family Assistance Program
5. Dependent Life Insurance
6. Optional Life
7. Healthcare Spending Accounts

This blog will focus on regulations related to dependent coverage, specifically those concerning extended health and dental benefits for children over the age of 21.

How long can a child stay on their parents' health insurance in Canada?

Let’s first review the age limitations for dependent insurance coverage:

Dependents under age 21 are eligible for benefits as long as they are not married or in any other formal union recognized by law. 

After reaching a certain age, plan administrators must approve a child as an overage dependent.

An Overage Dependent is a child covered under an employee's benefits plan who has exceeded the age limit set by the insurer. Typically, the age limit for this cutoff is 21 years old, but it may vary depending on the insurer. If an employee wants their child to continue receiving benefits, the child must be classified as an overage dependent.

Dependents over the age of 21 may still be eligible for benefits coverage if they meet all of the following requirements:

• They are in school full-time at an accredited college, university, trade school, technical school, or high school
• They are over the age of 21 but under 25 (26 in Quebec)
• They are dependent on your employee (the plan member) for financial support.

Alternatively, a dependent is entitled to coverage if they are incapable of financially supporting themselves because of a physical or mental disorder that began:

• Before they turned 21 or
• While they are students under age 25 and the disorder has been continuous since it began. (If this is the case the disabled dependent is eligible to remain on their parents’ coverage indefinitely.)
• And is not married or in any other formal union recognized by law. 

What about Over-age dependents attending school out of province or out of country? 

Good news is that coverage is not only possible but often required in such situations. Corinne Prevost breaks down the process in this YouTube video. 

Updating and waiving coverage 

It is your responsibility as the employer to ensure accurate information for employee benefits, including eligibility criteria for overage dependents. 

The insurer and parents must be informed when a child becomes an overage dependent, and the insurer must be updated annually. Plan administrators must annually confirm each overage dependent's status and regularly review active employees and their dependents to avoid paying for ineligible dependents.

Can a dependent be insured under the benefits plans of both parents? 

The answer is, dependent children can be covered under both parent's plans if both parents have family benefits coverage. Coordination of benefits comes into play as to which parent’s plan pays 1st and which one pays 2nd. COB rules determine that the benefits plan of the parent with the 1^st birthday in the calendar year will always act as the first payer of claims for their children. Any amounts not covered are then directed to the other parent’s plan as the second payer of claims.

If the application for coverage is made after the 31 day window, the insurance carrier has the right to refuse coverage. If coverage is granted, it will be effective as of the date of approval and usually have a restriction added to any dental claims in the first 12 months of coverage.

How can you, as an employer, help?

To help keep your employees in the know and ensure their dependents receive continuous coverage, you can direct them to take the following steps:

1. They need to confirm the overage student’s status as a full-time student when they submit their claims. Emphasize the importance of this step if the dependents have either recently become over-age students or they no longer qualify (as a result of turning 25 years old, or 26 in Quebec.)
   
   
2. They need to let your company’s benefits administrator know once the dependent qualifies as an over-age student. Otherwise, their claims will be declined.
   
   
3.  After that, whenever your employee submits a claim, let them know to simply check ‘Yes’ where it asks them to confirm if their dependent is a full-time student. 
   
   
4. When they visit the dentist, the over-age student can let the dentist know that they’re in school full-time. This is important because most dentists submit claims electronically. 
   
   

Conclusion

Understanding overage dependent coverage will enable you to keep employees files up-to-date and to provide clarity to your team regarding this topic. Although the types of dependents eligible for coverage may vary, the necessary actions for ensuring that their dependents receive benefits are straightforward.

In case of any concerns, we recommend that you contact a skilled employee benefits advisor. An advisor can be an essential partner for your business as you strive to take care of your people and provide your team with a trusted resource of information.