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Health Insurance for Adopted Children

Guest column by
Deborah Ghose
© 2002, All Rights Reserved

Related Resources •Adopting Parents Center •Money Issues in Adoption •Preparing to Welcome Your Child

Elsewhere on the Web •Department of Labor Advisory Opinion •North American Council on Adoptable Children

When Nancy Ashe asked me to write an article about health insurance and adoption, I was happy to say yes. As an insurance professional, I live and breathe insurance. As a pre-adoptive Mom who is in the middle of the homestudy process, I have a personal interest in these issues.

The basic question that Nancy asked me to address was this: Are adoptive children eligible for health insurance under the adopting parents' health plans? The answer, in most cases, is yes - especially if you are covered by employer-sponsored health insurance. However, there are situations where you may have difficulty obtaining coverage, even though your adoptive child is eligible. In that situation, it helps to know your rights and to have some solid documentation on the law.

There are also situations where your adoptive child will simply not be eligible for coverage. In those cases, your only recourse is to change health plans or to work through the system, to try to change the laws in your State.

A Regulatory Patchwork

There are both federal and state-level regulations affecting the eligibility of adoptive children for health insurance. To understand whether your health plan is regulated at the federal or state level, look at the table below. Note that employer-sponsored plans are subject to federal regulation, with an additional overlay of state regulation for insured plans (read: small group plans). Individual plans, by contrast, are regulated only at the state level.

Regulatory Jurisdiction by Type of Plan

Type of Plan	State	Federal
Individual coverage, state and local gov't.	X
Insurance policy, "insured plan"	X
Employer policy, "self-insured plan"		X
Employer-purchased insurance	X	X

Source: National Conference of State Legislatures, Frequently Asked Questions...Insurance and Managed Care

Protections Under Federal Law

Federal law requires that group health plans that provide coverage for "natural" children must provide the same coverage for adoptive children, to begin when children are placed for adoption. The specific law in question is Section 609(c) of the Employee Retirement Income Security Act of 1974 (ERISA). This law is succinctly described in the article "Medical Coverage for Adopted Children", by Michael S. Melbinger. Mr. Melbinger, an attorney with Chicago-based law firm Winston & Strawn, has done substantial pro bono work for Adoptive Families of America (AFA).

Prove it! In 1995, Mr. Melbinger wrote to the Department of Labor on behalf of AFA, requesting specific guidance from the Department on various questions that had arisen following the introduction of 609(c). In response, the Department issued a 6-page Advisory Opinion that addressed in detail such questions as: How is "placement for adoption" defined? Must a plan cover the birth expenses of the mother or the hospitalization expenses of a premature baby? A copy of this letter would go a long way with an employee benefits person who was questioning the eligibility of an adoptive child for health coverage.

Exception to the Rule: Almost all employer-based group health plans are subject to the ERISA provision described above. However there are two important exceptions: governmental employers and church-sponsored plans. These are generally regulated at the state level.

COBRA and HIPAA

Two additional pieces of federal legislation help adoptive families. As you may know, The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requires most employer-sponsored group health plans to offer continuation of health care coverage under certain circumstances. However, COBRA did not (in its original form) require employers to provide coverage for children born or adopted after a parent moved to COBRA.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) added additional protections for adopted children. First, HIPAA's portability requirements (which apply to both large and small group plans) state that insurers may not impose a waiting period or preexisting condition exclusion on a child under 18 who is adopted or placed for adoption and who is enrolled in a health benefit plan within 30 days of the date of adoption or placement for adoption. This provision applies equally to domestic and foreign adoptions.

HIPAA also clarified that after-born and after-adopted children are qualified beneficiaries under COBRA. In other words, if you lose your job in the middle of an adoption process, and elect COBRA, you may add your adoptive child to your plan while you are on COBRA.

In sum, parents who are covered by ERISA plans are in gravy. All such plans offer coverage for natural children. ERISA requires that adopted children receive the same treatment as natural children. HIPAA provides portability from job to job. And COBRA gives protection to after-born and after-adopted children.

Individual Plans

What if you are covered by an individual plan? These plans are regulated at the state level, rather than the federal level. As you might expect, state legislation is all over the board. I have not immersed myself in this issue enough to make general comments about how many states currently mandate equal treatment for natural and adopted children. New York appears to be a leader in the field; it has had legislation on the books for many years providing that group and individual plans must treat adopted children the same as natural born children (see summary). California also provides coverage for adopted children on the same basis as natural children (see Adopted Child Health Care Mandate).

Note: California is now in tumult over a court decision that invalidated previously-finalized second parent adoptions (used by gay and unmarried couples). Among other ramifications, this decision would take an indeterminate number of children who are currently eligible for health insurance under their second parent and make them ineligible.

In most states, the easiest way to find out the applicable law will be to call the State Insurance Department's Consumer Help Line.

Medicaid

The Adoption and Safe Families Act of 1997 is federal legislation that is intended to help foster children find placement in permanent homes by providing financial assistance to their families. It dovetails with similar legislation at the state level. Among other provisions, the federal act "extends Medicaid or state funded health insurance to children with non federal (state funded) adoption subsidy agreements, if the children are determined to have 'special needs for medical or rehabilitative care' ... Under the Title IV-E adoption assistance program, Medicaid coverage transfers with the child to any new state of residence."

Children adopted internationally will sometimes be eligible for Medicaid. Under the Child Citizenship Act of 2000, certain children who are adopted internationally are entitled to automatic citizenship, and therefore may apply for Medicaid. This advisory from the State of Connecticut sets out some of the issues.

Read More About It

• Medical Coverage for Adopted Children:
  This two-page article is an excellent primer on the issues.
• Comments on The Adoption and Safe Families Act of 1997:
  This article is very helpful for adoptive parents of special needs children.
• HUSKY for Internationally Adopted Children:
  This Connecticut memo discusses the Medicaid eligibility of internationally adopted children under federal and state law.

• The National Center for Adoption Law & Policy:
  The Law Center serves as a focal point for education about adoption law, as well as for discussion and reform of those laws.
• Adoption Law:
  Cornell University's Legal Information Institute has a section on adoption law. This is a good site if you're looking for links to actual statutes.

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Deborah Ghose M.S., C.F.A., has more than 15 years of managerial experience in different segments of the insurance and health care industries. She has an A.B. degree from Harvard College and an M.S. in Management from the Sloan School of Management at M.I.T. She is a Chartered Financial Analyst.

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