Medical Coverage For Adopted Children Under The Omnibus Budget Reconciliation Act of 1993
President Clinton signed into law the Omnibus Budget Reconciliation Act of 1993 on August 10, 1993. Buried among the sweeping changes in the Tax and employee benefits area made by OBRA ‘93, is one substantive change that should be of enormous benefit to the families who have adopted a child and families that are considering adoption. This change is revolutionary because it represents the first time since the promulgation of the Employee Retirement Income Security Act (ERISA) in 1974 that a particular benefit has been mandated under medical benefit plans governed by ERISA.
The new law requires that any “group health plan” which provides coverage for dependent children of plan participants, must provide benefits to dependent children placed with participants for adoption under the same terms and conditions as apply in the case of dependent children who are “natural” children of participants under the plan. Thus requirement applies irrespective of whether the adoption has become final.
Additionally, an employer’s group health plan may not restrict coverage of any dependent child adopted by participant, or placed with a participant for adoption, solely on the basis of preexisting condition of such child at the time that such child otherwise would become eligible for coverage under the plan, if the adoption or placement for adoption occurs while the participant is eligible for coverage under the plan. The law protects children who have not attained age 18 as of the date of the adoption or placement.
“Group health plans” includes the health and medical benefit plans of virtually every employer that is subject to ERISA in the United States. Group health plans includes both plans that are self insured by the employer and fully insured plans, under which benefits generally are provided directly by an insurance company. Employers that are not subject to ERISA and therefor, exempt from the new law, are governmental employers (which would be subject to state or federal laws governing coverage) and “churches” (which could include church sponsored organizations, such as hospitals).
For your adopted children to be entitled to coverage under your employer’s medical benefit plan you must be a plan participant and you must otherwise be eligible to elect family coverage under the plan. You must follow all other applicable requirements for coverage under the plan. If your adopted child (or child living with you prior to finalization) was denied coverage by your company before August 10, 1993 because of a pre-existing condition, the federal law mandates that your child now must be covered if you meet the eligibility requirements of your employer’s plan.
There still could be circumstances and plans under which your adopted child would not be eligible for medical coverage or would be subject to an exclusion of coverage for a preexisting condition. For example, if you adopted a child at a time when you were not eligible to elect coverage under an employer’s medical plan, any preexisting condition clause could still be applicable. Similarly, if you changed jobs, any preexisting condition clause in your new employer’s medical plan would also apply to adopted children: the plan need not provide coverage to adopted children that is better than the coverage provided to other children.
The new law is contained in Section 609 of the Employee Retirement Income Security Act of 1974 (ERISA), and became effective immediately, on August 10, 1993, the date the President signed it into law. The law should be equally applicable to children adopted or place prior to the August 10 effective date.
Mike Melbinger is the partner in charge of the Employee Benefits and Executive Compensation Group of the national law firm of Schiff, Hardin & Waite, 7200 Sears Tower, Chicago, Illinois 60606
