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When Nancy Ashe, About.com's Guide to Adoption, asked me to write an article about health insurance and adoption, I was happy to say yes. As an insurance professional, I live and breathe insurance. As a pre-adoptive Mom who is in the middle of the homestudy process, I have a personal interest in these issues.

The basic question that Nancy (aka "Sass") asked me to address was this: Are adoptive children eligible for health insurance under the adopting parents' health plans? The answer, in most cases, is yes - especially if you are covered by employer-sponsored health insurance. However, there are situations where you may have difficulty obtaining coverage, even though your adoptive child is eligible. In that situation, it helps to know your rights and to have some solid documentation on the law.

There are also situations where your adoptive child will simply not be eligible for coverage. In those cases, your only recourse is to change health plans or to work through the system, to try to change the laws in your State.

A Regulatory Patchwork

There are both federal and state-level regulations affecting the eligibility of adoptive children for health insurance. To understand whether your health plan is regulated at the federal or state level, look at the table below. Note that employer-sponsored plans are subject to federal regulation, with an additional overlay of state regulation for insured plans (read: small group plans). Individual plans, by contrast, are regulated only at the state level.

Regulatory Jurisdiction by Type of Plan Type of Plan
State(S) Fed (F)
Individual coverage, state and local gov't. S
Insurance policy, "insured plan" S
Employer policy, "self-insured plan" F
Employer-purchased insurance S F

Source: National Conference of State Legislatures, Frequently Asked Questions...Insurance and Managed Care

Protections Under Federal Law

Federal law requires that group health plans that provide coverage for "natural" children must provide the same coverage for adoptive children, to begin when children are placed for adoption. The specific law in question is Section 609(c) of the Employee Retirement Income Security Act of 1974 (ERISA). This law is succinctly described in the article "Medical Coverage for Adopted Children", by Michael S. Melbinger. Mr. Melbinger, an attorney with Chicago-based law firm Winston & Strawn, has done substantial pro bono work for Adoptive Families of America (AFA).

Prove it! In 1995, Mr. Melbinger wrote to the Department of Labor on behalf of AFA, requesting specific guidance from the Department on various questions that had arisen following the introduction of 609(c). In response, the Department issued a 6-page Advisory Opinion that addressed in detail such questions as: How is "placement for adoption" defined? Must a plan cover the birth expenses of the mother or the hospitalization expenses of a premature baby? A copy of this letter would go a long way with an employee benefits person who was questioning the eligibility of an adoptive child for health coverage.

Exception to the Rule: Almost all employer-based group health plans are subject to the ERISA provision described above. However there are two important exceptions: governmental employers and church-sponsored plans. These are generally regulated at the state level.

COBRA and HIPAA

Two additional pieces of federal legislation help adoptive families. As you may know, The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requires most employer-sponsored group health plans to offer continuation of health care coverage under certain circumstances. However, COBRA did not (in its original form) require employers to provide coverage for children born or adopted after a parent moved to COBRA.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) added additional protections for adopted children. First, HIPAA's portability requirements (which apply to both large and small group plans) state that insurers may not impose a waiting period or preexisting condition exclusion on a child under 18 who is adopted or placed for adoption and who is enrolled in a health benefit plan within 30 days of the date of adoption or placement for adoption. This provision applies equally to domestic and foreign adoptions.

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