Many young adults (and their parents) worry about health insurance coverage
when they lose their status as dependents on their parents' health
plans. But there's no need to panic. Some colleges and universities
offer health insurance
to both undergraduate students and graduates. Even when this option is
not available, there are several others that are suitable for young
adults searching for health insurance alternatives.
A
dependent child may lose his or her eligibility under a parent's health
plan in any of several ways. Depending on the health plan, a child may
no longer be classified as a dependent when:
- The
child loses status as a full-time student. The child may have graduated
from either high school or college, dropped out of school or cut back
on his/her college class load.
- The child, despite full-time
student status, reaches the plan's maximum dependent age limit. This is
typically between the ages of 19 and 25.
- The child moves outside the United States.
- The child is eligible for group health insurance through his/her employer or the military.
It's a good idea to check your health insurance plan's requirements to determine which of these scenarios apply before the
child loses dependent status. Once you know the time frame for making a
decision, you can begin to search for alternate health insurance
coverage.
| Loss of dependent-child status is considered a "qualifying event" for COBRA. |
The
Consolidated Omnibus Budget Reconciliation Act (COBRA) is a health
insurance safety net for people who are leaving a job and want to
continue their current group health insurance. However, it can also
benefit young adults previously covered under a parent's group health
plan but become ineligible because they reach the policy's age limit or
are no longer full-time students.
Loss
of dependent-child status is considered a "qualifying event" that
triggers the availability of 36 months of continued health insurance
coverage under COBRA. However, not every employer has to offer COBRA.
The employer must offer COBRA if it has 20 or more full-time employees
and offers health insurance.
Beware: This
option can be expensive because the employer no longer picks up a major
portion of the child's monthly health insurance premium. Whoever pays
the premiums will be responsible for paying full price, plus an
administrative fee of up to 2 percent. (For more on COBRA, see Know your COBRA rights.)
With
low premiums and high deductibles, short-term health insurance policies
are designed to be a low-cost safety net in case of serious injury or
illness rather than a comprehensive day-to-day health insurance plan.
Benefits are limited, there are strict eligibility requirements to
qualify and short-term health insurance typically lasts only one to 12
months. However, it's potentially a good option if the child will soon
be graduating and won't be able to obtain health insurance through an
employer right away. For more, see The basics of short-term health insurance.
Individual
health insurance is not sponsored through an employer; it is insurance
you purchase on your own. It is much more expensive than group health
insurance, but if there's no other choice, it's better than going
without insurance altogether.
Individual
plans are medically underwritten (unlike group health insurance plans),
so if the child has health problems the insurer may reject his or her
application or attach exclusions to the policy. However, if the child
is healthy, youth is on his or her side. Young and healthy individuals
stand the best chance of securing individual health insurance at a
reasonable price. For more, see Tips for buying individual health coverage.
If
the child won't be able to obtain health insurance through an employer
right away, and can't qualify for an individual policy due to a
pre-existing condition such as asthma or diabetes, he or she may be
eligible for guaranteed health insurance through a "high-risk pool."
There are drawbacks: Not every state has a high-risk pool, there may be
a lengthy waiting period and the policies are more expensive than most
individual and group health insurance plans.
A
high-risk health insurance pool is a good option for less healthy
individuals who are ineligible for continued coverage under COBRA or
who can't qualify for alternate health insurance on their own.
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