Most companies surveyed recently by consulting firm Hewitt Associates say they willhold off on extending coverage to their workers' eligible adultchildren up to age 26 until 2011, when they must comply with aprovision in the new health care reform law.

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However, some companies are moving forward with the requirementearly. Hewitt's survey of more than 500 large U.S. employers,representing 6.9 million covered employees, shows approximately950,000 workers will be able to obtain health coverage for thesedependents earlier than Jan. 1, 2011.

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Of the companies that plan to extend coverage, 10 percent willvoluntarily extend coverage early for all eligible adult childrenand another 9 percent will do so for graduating students alreadycovered under the health care plan, according to Hewitt'ssurvey.

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Still, a little more than three-quarters (77 percent) plan towait to extend health care coverage until they are required to doso; another 4 percent of employers are undecided.

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"Employers that are choosing to extend coverage early are doingso because it earns employee goodwill, particularly when many adultchildren today can't find jobs or were laid off during therecession," said Ken Sperling, Hewitt's global health care leader,in a statement.

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"However, most companies are holding off on extending coveragefor a variety of reasons. The cost and administrative complexitiesof early adoption are key factors, but it's really about their viewof access. Many employers believe most adult children are healthyand can find affordable coverage in the individual market. Theyview COBRA as another option, particularly for those adult childrenwith preexisting health conditions. So for many employers, theydon't see a coverage gap they feel compelled to immediatelyclose."

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According to Hewitt, most employers have already estimated thecost of expanding coverage to adult children. Eighteen percentexpect to see less than a 1 percent increase in total annual healthcare costs between 2011 and 2014; Twenty-six percent of companiesproject a 1 to 2 percent increase; and 11 percent expect costs toincrease between 2 and 5 percent.

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Hewitt estimates that an average employer might cover 5 percentto 10 percent more adult children than they do today under the newprovision. This includes dependents ages 19 to 23 who are notfull-time students and adult children ages 23 to 26. For anemployer with 5,000 employees, Hewitt estimates that the additionalcost of covering these adult children could range between $350,000and $720,000 per year in premiums and claims costs.

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"Most employers feel the wait for required coverage isrelatively short and will extend coverage to adult children inJanuary 2011 when their next plan year begins," says Sperling."Parents should pay careful attention to their open enrollmentmaterials this fall, and closely evaluate the coverage options andassociated costs in both their employer-sponsored plans and theindividual insurance market."

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