Dependent Coverage

During the 2007 legislative session, a change was made in state law amending the definition of "dependent" under group health, dental, and vision plans.

The amended language provides that a "dependent" include, among others, "unmarried children under the age of 25." Previously, a child age 19 through 24 had to be a full-time student in order to be a dependent unless the child was disabled. This requirement will apply to Minnesota governmental entities that are both self-insured and fully-insured beginning for plans that renew on or after Jan. 1, 2008.

The state definition of dependent differs from the federal tax definition of dependent. Therefore, there may be a tax consequence for employees electing to cover children that do not qualify as a tax dependent.

Cities should consider the following issues when evaluating this change:

  • Definition of dependent may vary under various plan options offered by the city; how will this be coordinated?
  • How will the city define the value of coverage?
  • How will the city administer payroll deductions and taxing the value of coverage?
  • How will the city communicate the change and possible tax consequence to employees?
  • How will the city track mid-year changes?
  • Consider tax consequences for retirees that may cover “dependents” ages 19 to 24 – including former police officers and/or firefighters continuing coverage under MN Statute 299A.465.

Administrative resources
The following materials, offered in cooperation with Hitesman & Associates, may help your city employees verify the status of dependents. You may also want to check with your insurance carrier to see if it has information that can assist you in administering this change and communicating it to employees.

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