As child dependents grow older, their coverage under their parents’ plans may change or end if they’re not labeled as “overage dependents.” Plan Administrators must manage employee records, including dependents, and notify employees about overage dependents. But what occurs when dependents reach this stage and become overage dependents? What actions should Plan Administrators and employees take to ensure coverage continues? Let’s explore these questions further.

Understanding Overage Dependents

In Canada, an overage dependent refers to a dependent child who surpasses the age limit set by the insurer under their parent’s benefits plan. Typically, this age limit falls around 19 or 21 years old, varying depending on the insurer. When dependents reach this age threshold, their benefits coverage may cease unless specific criteria are met for them to be reclassified as overage dependents.

Criteria for Overage Dependents

Between the ages of 22 and their 26th birthday, dependents can still be covered under their parent’s benefit plan if they meet the following criteria. This criteria may vary slightly by Insurer, but generally speaking, this is what will need to happen:

  • Enrollment in continuing education: Overage dependents must be enrolled full-time at a recognized post-secondary institution, such as a university or college. Alternatively, they can participate in a Co-op program endorsed by the same institution.
  • Financial dependency: Overage dependents must primarily rely on a parent or guardian for financial support. They are restricted from working more than 30 hours per week while actively enrolled in their studies. However, during school breaks or when classes are not in session, they may work beyond the 30-hour limit.
  • Single status: Overage dependents cannot be married or in a common-law relationship. If they enter into such a union, their status shifts from dependent under their parent or guardian’s benefits plan to dependent under their spouse’s plan. Consequently, they lose their status as a dependent under the original employee benefits plan.

Additionally, it’s worth noting that dependents can continue their benefit coverage beyond 26 if recognized as disabled by the Canada Revenue Agency (CRA).

Administrator Responsibilities

As a plan administrator, ensuring accurate and up-to-date information regarding overage dependents is paramount. To effectively manage overage dependents, here are the essential steps Plan Administrators should take:

Notification of relevant parties: When a child transitions into an overage dependent, Plan Administrators must promptly notify the Insurer and the parents or guardians about the dependent’s eligibility status. In the case of Wellbytes, our internal systems automatically alert us to such transitions, enabling us to contact you to collect the necessary details to determine whether the dependent will continue coverage as an overage dependent.

Annual updates to the Insurer: Overage dependents must maintain their eligibility to retain coverage. Therefore, Plan Administrators need to annually verify the status of each overage dependent to ensure compliance with eligibility criteria. In the case of Wellbytes, we simplify this process by sending out annual student confirmation letters.

Regular review of active employees and dependents: It’s advisable for Plan Administrators to periodically review the list of active employees and their dependents to prevent the payment of premiums or claims for ineligible dependents. This ensures that the benefits plan remains cost-effective and aligned with the organization’s policies.

Navigating overage dependents is a critical aspect of benefits administration for plan administrators. By understanding the criteria, and administrator responsibilities surrounding overage dependents, administrators can ensure seamless benefits coverage for employees and their dependents. Stay informed, proactive, and diligent in managing overage dependents to optimize benefits administration within your organization.