Ruling to speed up coverage for children in their 20s

WASHINGTON (AP) - President Barack Obama is pushing to speed up insurance coverage for young adults in their twenties - a key early benefit of his prized health care overhaul - but the law's fine print suggests some won't be able to sign up until next year.

What seemed like a simple solution so middle-class parents don't have to worry about keeping kids insured as they move from home or school to work has generated lots of questions.

The law says employers must start offering extended coverage as early as Sept. 23, but many families will likely have to wait until Jan. 1, 2011, as health care plans typically operate on the calendar year.

On Tuesday, the IRS issued a notice reassuring employers that neither they nor their workers would face negative tax repercussions from expanding coverage immediately. Some businesses weighing whether to act now had worried that traditional tax breaks for employer-sponsored health care might not apply.

"We want to make it as easy as possible for employers to quickly implement this change and extend health coverage on a tax-favored basis to older children of their employees," said IRS Commissioner Doug Shulman. The notice clarifies that under the new law, companies offering a cafeteria-style menu of employee benefits can expand coverage immediately.

Stay tuned. Even if the timeline for the new benefit is getting clearer, it's still far from clear how employers and insurers will price the new coverage. There could be considerable differences in costs.

With college graduations just weeks away - and the economy still uncertain - the No. 1 inquiry corporate benefit managers are getting from employees is how they can keep their adult children on the company plan, said Paul Dennett, vice president for health reform at the American Benefits Council.

Currently, the age at which young adults lose parental coverage varies widely. Most plans cover dependents until they graduate from college, but many kids don't go to college. An estimated 485,000 young adults would gain coverage from the provision.