Revision Helps Adopted Children Get Health Coverage
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 dramatic.
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 conditions. …