Kiplinger magazine contributing editor Erin Burt says if you're dropped by your parents' plan (usually when you graduate college or when you turn 21 for most states), you can still get good, affordable coverage on your own.
Going without coverage is downright risky, says Burt -- not only for your health but also for your finances. One out-of-pocket visit to the emergency room for an accident or illness could cost you hundreds or thousands of dollars, not including the cost of any follow-up care you may need.
So if you're graduating from college this year or have a birthday soon, your free ride may be coming to an end. After you apply for a new policy, it can take a month or two for it to kick in, so act now to avoid leaving yourself vulnerable.
Burt suggests these three options to fill that gap.
Extend your current coverage under Cobra.
Ask your parents to contact their benefits office and ask about Cobra, the federal law that allows an adult child to remain on a parent's policy for up to 36 months. Most insurers on the individual market will exclude any pre-existing medical condition, so maintaining your no-questions-asked coverage with your current insurer may be your best bet if you have a condition. Note, however, that choosing to extend your current coverage can be expensive: Cobra coverage typically costs between $200 and $500 a month. So if you are indeed in very good health with no chronic conditions, you might be better off buying individual coverage.
Consider a student policy or short-term coverage.
This used to be the go-to solution for new grads looking to bridge the gap between graduation and a job with health benefits, says Burt. But she warns they too may not be the best deal. A new study by the Government Accountability Office found that student health plan annual premiums can range from $30 to $2,400, with some plans excluding or limiting preventive care, prescription drug coverage and other basic health services.
Shop for an individual policy with a high deductible.
It can cost as little as $50 to $150 per month in states with competitive health-insurance markets (that excludes New York and New Jersey). Such plans carry no expiration date like student and short-term policies do. And benefits can be tailored to fit your needs, so it pays to shop around. For example, by purchasing insurance with a deductible of at least $1,100 for individual coverage or $2,200 for a family plan, you qualify for a health savings account. You can make pretax contributions to the account and use the money tax free to cover your deductible and other out-of-pocket medical expenses. Any unused money rolls over from year to year.
To find the best health insurance policy for you, compare rates and benefits on student, short-term and individual policies at eHealthinsurance.com, or contact an independent insurance agent through the National Association of Health Underwriters (www.nahu.org).
By Marshall Loeb