When Does a Dependant Become Independent?
John D. Harkins, Partner, Employee Benefits & Pensions

Recently, there have been issues around the eligibility of dependants under the benefit programs of their parent(s). Most benefit programs allow children under the age of 21 (to age 25 if enrolled in an accredited educational institute, or beyond age 25 if incapacitated) to remain on the plan so long as they are dependent on their parent. Recent changes in the graduating age for high school students has meant that those children not continuing their education, will be 17 years old and technically eligible to continue on their parent(s) plan for almost four years.

The question then becomes if these children are living at home, what constitutes dependency.

The definition of a dependant varies amongst insurance carriers; however, a common theme is coverage should not be extended to a dependant that is working FULL-TIME. The rule of thumb for FULL-TIME employment ranges from 24-30 hours per week and can be set by the employer in the contract.

In today’s employment market, employers are providing the equivalent of full-time hours, but classing employees in such a way that they are not eligible for benefits. As an employer, you can determine the eligibility requirements for dependants.

As an example, let’s assume you have an employee that has a dependant, age 20, working 30 hours per week. Those hours constitute full-time employment and make that dependant ineligible for coverage. The income they receive from this employment also likely makes them ineligible as a dependent with CRA as their income exceeds $7,484.

Employers need to be aware of what qualifies an employee’s child as a dependant. Children living at home, working the equivalent of full-time hours, should not be eligible.

We encourage employers to refer their contracts and if unsure, to call us.

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