QUESTION: Our company is an applicable large employer (ALE) that sponsors a group health plan covering eligible employees and their dependent children. We understand that the Affordable Care Act (ACA) requires us to offer coverage to dependents. At what point can we terminate a dependent child’s coverage as the child approaches age 26 without risking employer shared responsibility penalties?

ANSWER: To avoid employer shared responsibility penalties, an ALE must offer coverage to an employee’s dependent child (including a child who has been legally adopted or placed for adoption) through the last day of the month in which the child turns 26, not merely through the day before the child’s birthday. For this purpose, a dependent does not include a stepchild, a foster child, or a child who does not reside in the United States or a country contiguous to the United States and who is not a United States citizen or national (subject to the adopted-child exception), and a dependent does not include a spouse.

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