First, what defines a dependent children?

A dependent child in terms of health insurance is a minor age 0 to 18 who is under the policy of an adult.  Between ages 19-22, the child needs to be financial dependent on the adult (claimed by adult on Federal Income Tax).  There may also be a requirement that the child is a full time student which is more common on the California Small Group market.  The carrier may send out a letter requesting proof of full-time student status which is typically 12 or more units.  The point at which a child must come off the adult's policy is usually age 23 or 24 depending on individual/family and the carrier. 

What happens when a dependent child can no longer remain on the adult's health insurance policy?

If the policy is a California individual family health plan, the over-age child can usually be split off onto his/her own policy with the same coverage as the parent's plan with no medical underwriting for most major carriers.  This makes sense since you can usually split family policies in the case of divorce, etc.  The "no medical underwriting" is a critical point if an over-age child has health issues. 

If the policy is a Small Group health plan, the dependent should be able to get Cobra for at least 18 months and perhaps up to 36 months with a Cal-Cobra extension regardless of health.  This assumes that the group plan stay intact.  If a dependent child is in good health, it usually makes sense to run an individual health insurance quote as an alternative to the Cobra option but a dependent never wants to exhaust his/her cobra election period without having other health insurance coverage firmly in place.  Cobra tends to be more expensive (albeit for richer benefits) so individual health plans may offer a good alternative.  Again, never drop coverage until written notification of approval from the carrier for a rate and plan you want.

What are the benefits to keeping children on as dependents?

With a group health plan, the benefits to keeping children on the adult parent's plan is obvious if the employer is paying all or a percentage of dependent coverage.  The company is subsiding the dependent coverage and therefore, it is usually hard to find a better value on the individual health market.  Some carriers will apply one dependent rate for multiple children.  If the oldest child is within the 19-23 age, it would be advantageous to keep him/her on the family plan since the rate is the same with or without his older child for certain carriers such as Anthem Blue Cross.  Otherwise, you or the company would have to pay the family rate plus an individual health plan for the overage dependent child.  Individual/family plans may present the same benefit for multiple children under a flat "family rate".

If a child is on a group plan and has health issues, this can limit our ability to get individual/family health coverage on the private market.  The child may have Cobra for 18-36 months and a HIPAA option at the end of this, but the rates are typically higher than individually purchased health coverage.  This is less of an issue with individual/family coverage dependent children since they can usually be split off onto their own policy. 

Dependent coverage versus college plans

Another consideration is whether it makes sense for a dependent child to go with a college health plan or remain as a dependent.  Aside from the premium effect mentioned above, it's important to compare apples and apples in terms of coverage.  There are benefits and costs to college plans so it's important to understand and compare them thoroughly.  You can find more information on college plans at this site.

To run your instant health insurance:

California Individual Family health insurance quote
California group health insurance quote