Thousands of parents who have had difficulty securing health
coverage for their adopted children are expected to benefit from
little-noticed provisions in the Omnibus Budget Reconciliation
Act of 1993 _ the bill that raised taxes for wealthy folks and
Social Security recipients.
In addition to altering the nation's tax rates, the
reconciliation act (OBRA) tightened loopholes in the Employee
Retirement Income Security Act of 1974 (ERISA). That act governs
many company-sponsored employee benefits, including company
health plans and certain pension programs.
The aim of the 1993 revision was to put adopted children on an
even keel with kids who were born into the family. In effect, the
law says that if your health plan provides coverage for
"biological" children, it must provide substantially identical
coverage for adopted children. Additionally, the coverage must
start from the moment the parents assume "total or partial"
financial obligation for the child _ rather than when the
adoption is finalized.
That's pivotal because many adoptions take months _ even years
_ before they are complete. In the past, insurers were able to
deny coverage during the placement period and, if a medical
condition cropped up before the adoption was final, they could
bar reimbursements related to that condition indefinitely.
It's worth noting that many states, including California,
already have insurance laws that bar discriminating against
adopted children. However, state insurance laws generally do not
apply to self-insured companies that are regulated by the federal
retirement law, says Steve Humerickhouse, legislative affairs
director with Adoptive Families of America Inc., a support group
based in Minneapolis. And some experts estimate that these
companies employ roughly 40 percent of the nation's workers.
Already, some parents say the impact of the law has been
Consider Jim and Patty McLaughlin, Midwestern parents of two
adopted children. When the McLaughlins adopted Nathan in 1991,
they battled for 11 months to secure his insurance coverage.
(Their state has a law barring adoption discrimination, but their
group plan was covered by ERISA.) But when Bethany was adopted
four months ago _ after the federal law was passed _ the insurer
covered her without a peep. That was a huge relief, Jim says,
because Bethany was hospitalized for a heart condition before the
adoption was final.
However, others note that their insurers had to be notified
about the new law before they would agree to coverage.
Sharon Alestalo, a Syracuse, N.Y., adoptive parent, says she
sent a copy of the law to her insurer when she realized the
company planned to deny coverage for her son's heart condition.
Kristofer was born with a small hole in a heart muscle, she
notes. If he was her biological child, coverage would be
automatic. But the insurer previously imposed an 11-month waiting
period for coverage of adopted children's pre-existing