Adoptive parents can be reassured that under federal and California law, their health insurance plan must treat an adoptive child the same as a “natural” child and must provide coverage at the time the adoptive child is legally placed in their custody prior to finalization of the adoption.
Section 609(c) of the Employee Retirement Income Security Act of 1974 (“ERISA”) explicitly states that a child placed for adoption must receive the same coverage as a “natural” child of a plan participant under any plan that is subject to ERISA. The same coverage is required irrespective of whether the adoption has become final.
Under ERISA, the adoptive child is covered by the adoptive parents’ health plan at the time the adoptive child is placed with the adoptive parents. ERISA defines the term “placement” or “being placed” for adoption, in connection with any placement for adoption of a child with any person, as “the assumption and retention by such person of a legal obligation for total or partial support of such child in anticipation of adoption of such child.”
In an independent adoption, the adoptive child is legally placed with the adoptive parents when the birth mother (and birth father if he also is placing the child for adoption) signs the California Independent Adoption Placement Agreement. This document usually is signed at the hospital upon discharge and legally places the adoptive child with the adoptive parents. In most circumstances, this also is the time when the adoptive parents take physical custody of the child.
In 1995, the Department of Labor released an “Advisory Opinion” regarding the obligations of group health plans under ERISA relating to coverage of adopted children: http://www.dol.gov/ebsa/programs/ori/advisory95/95-18a.htm.
It is important to note that ERISA does not require adoptive parents’ health insurance plans to cover the birth mother’s hospital expenses. This is because in most circumstances, the birth mother will be covered by federal Medicaid or a state health care program like Medi-Cal in California, which covers pregnant women pre-adoptive placement. Prospective adoptive parents are not legally responsible for the medical bill for the birth mother.
In addition, the Health Insurance Portability And Accountability Act of 1996 (“HIPAA”) prohibits insurance plans from excluding an adopted child from coverage solely on the basis of a preexisting condition if the adoptive parents request enrollment within 30 days of placement. Therefore, it is important that adoptive parents request enrollment of their adopted child within 30 days of placement. Also, under HIPAA, a child adopted by an individual during the period of COBRA coverage is considered a qualified beneficiary and will be allowed to be enrolled in the plan immediately.
In additional to federal law, California state law requires insurers to cover adopted children the same as “natural” children. California Health and Safety Code Section 1373(c) and California Insurance Code Sections 1019 and 10121 require that health care plans provide accident and sickness coverage to an adopted child from the moment the child is placed in the physical custody of the adopting parents.