As children grow older, their eligibility for coverage under their parents’ employee benefits plan can change. This guide explores the concept of overage dependents, specifically focusing on full-time students. We’ll explain what overage dependents are, the criteria they must meet to maintain coverage, common scenarios to be aware of, and the responsibilities of plan administrators and employees in keeping information up-to-date.
Defining Overage Dependents
An overage dependent is a child who has reached a specified age set by the insurance provider, usually 21 years or older. At this point, their coverage under the employee benefits plan may cease unless they meet certain criteria to be designated as overage dependents.
Eligibility Criteria for Full-Time Student Overage Dependents
To be considered overage dependents as full-time students and retain benefits coverage, they must meet the following criteria:
- Enrollment in Full-Time Studies: Overage dependents must be actively enrolled in full-time studies at a recognized post-secondary educational institution or participate in a Co-op program sponsored by the same institution.
- Financial Reliance: They should primarily depend on a parent or guardian for financial support and not work more than 30 hours per week while in school. During non-school periods, they can work more than 30 hours per week.
- Marital Status: If a dependent child is married or in a common-law relationship, they become dependent on their spouse’s plan, not their parents’. However, disabled dependents recognized by the Canada Revenue Agency (CRA) can still enjoy coverage.
Common Scenarios Involving Full-Time Student Overage Dependents
Plan administrators must stay vigilant and update employee information. Here are four common scenarios to watch for:
- High School Graduation: Graduating high school and becoming financially independent or not pursuing full-time post-secondary education means removal from the benefits plan. Administrators should remind employees at this time.
- Age of Majority: When dependents reach age limits (often 21), they become overage dependents and must meet full-time student criteria. Administrators should reach out to employees to discuss their options.
- Age Limit for Overage Dependents: Most plans limit coverage for full-time student overage dependents up to age 25 or 26. Administrators should be aware of this milestone and the insurance provider’s automated removal process.
- College or University Graduation: Upon completing their academic journey, full-time student overage dependents no longer qualify for coverage unless they continue full-time education. Administrators should remind employees annually and update dependent status accordingly.
Each of these scenarios represents a “life event” that can affect benefits coverage.
Responsibilities and Liabilities of Plan Administrators
Maintaining accurate information, including full-time student overage dependents, is the responsibility of plan administrators. Key tasks include:
- Notification: Administrators must promptly inform the insurer and parents or guardians when a dependent child becomes an overage dependent while in full-time education.
- Annual Updates: Full-time student overage dependents must meet eligibility criteria annually. Administrators must re-verify each dependent’s status to ensure continued benefits.
- Periodic Audits: Regularly reviewing the list of active employees and their full-time student dependents helps identify ineligible dependents, preventing unnecessary premium payments and claims.
In conclusion, understanding overage dependents and their eligibility criteria as full-time students is crucial for plan administrators and employees. By staying informed and managing dependent status actively, employers can ensure smooth employee benefits plans and avoid complications.