Millions of recent high school and college grads have the future ahead of them. But what they may not have ahead of them is health insurance. Our financial advisor Ray Martin has some tips on how to get health insurance for young adults after they have graduated from high school or college and are no longer covered under their parents' policies.
According to US Census Bureau statistics, young adults aged from 18 to 24 are more likely than any other group to be without health insurance. And the weak economy may make it harder for them to get a job that provides health benefits.
About 3 million students will graduate from high school in the class of 2001 and over 1.8 million will graduate from 2-year and 4-year colleges. Many will face the challenges of preparing for interviews and finding jobs.
Many young adults and their parents are simply not aware of the impact that graduation will have on health insurance coverage. Also, some young adults think they are young and healthy and don't need it.
Graduating Off Coverage
Even if a parent has family health insurance coverage through an employer's group plan, most group health plans only cover dependent children up to age 19, or until age 25 if a school can verify their child is a full-time student. Many plans extend coverage until the next verification period, typically in the fall following graduation. But some plans terminate coverage immediately upon graduation. The point is that parents who think their grads are covered should read their coverage contracts to determine how their plans work.
Even if a grad gets a job with an employer who provides health benefits, some companies mandate that employees be employed for up to 6 months before employer-sponsored health coverage and other benefits go into effect.
Sorting through your options and finding affordable health insurance can be challenging, but not impossible. Here's where to look:
COBRA Continuation of Coverage
Designed initially to allow individuals to continue coverage under their employers' group plans after they change or lose jobs, COBRA (Consolidated Omnibus Budget Reconciliation Act) coverage can also apply to children who lose coverage because they end their status as full-time students. Graduates previously covered under their parents' group coverage have 60 days from termination of coverage to elect to pay for coverage under their parents' employer-provided plan. The cost of coverage will be whatever the particular employer offers. Coverage can be expensive, but there are typically no restrictions for preexisting conditions, and the coverage can be discontinued after permanent coverage is found.
Short-term Health Insurance
This form of coverage is offered by a select group of insurance companies and features coverage ranging from 1 to 12 months. This can be a good option if COBRA is not available and a job with benefits is around the corner The Celtic Insurance Company offers a postgrad health plan that can cost as little as $24 a month and features a selection of deductibles ($250 to $1,000). After that is satisfied, the coverage pays up to 80% of the next $5,000 in covered expenses then 100% up to $2 million. Other companies that offer short-term health insurance include Fotis Health, Golden Rule, and Trustmark Insurance Co.
Catastrophic Health Insurance
As the name implies, catastrophic health insurance policies are primarily designed to cover major health and medical expenses. The cost is relatively low because the insured must first satisfy a high deductible, ranging from $500 up to $15,000, depending on the plan purchased. These policies are not intended to pay for routine doctors' office visits or trips to the emergency room. While this is affordable coverage fothe worst that can happen and can offer protection for a family's assets, few young people could afford to pay a $5,000 deductible if they incurred a serious illness or an accident.
Alumni Association Coverage
Most college alumni associations offer health insurance to graduates. Call your college to find out if they offer this coverage.
Many health insurance companies offer individual health insurance coverage. This can be very expensive and may not be available in your state. Often application requirements will apply and preexisting conditions will be excluded from covered health and medical conditions. Some states mandate a "high-risk pool" that guarantees by law that they accept those who apply, under certain conditions. Check with your state's insurance department for more information.
Some young adults turn to local clinics for low-cost or free medical care for things like routine visits or check-ups. But this is not a viable alternative for a major illness or accident, as hospitalization is not provided.
This is a joint federal-state health insurance program for individuals who meet near-poverty-level income and asset qualifications. States usually provide Medicaid for individuals who receive federally funded cash assistance payments such as SSI. For more information about Medicaid, contact your state's Medicaid agency or social service or welfare office.
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