As parents and adults, we know better. And now that the little darlings are away at college, you need to think about their health insurance coverage. Should you change it? Consider carefully before you do.
Generally, a parent’s health insurance policy will cover dependents as long as they’re a full-time student, up to certain age limitations, usually 19 to 25. The operative phrase here is full-time student – if they’re not carrying a full academic load, the insurance company can drop their coverage sooner. And even if they are carrying a full-time student load, insurance companies can cease to cover them when they’ve reached the plan’s maximum dependent age, typically 23 to 25.
If you, as a parent, are continuing to be financial responsible for your child, there are some alternatives to consider. And the best time to take a look at this issue is before you’re forced to make a decision by the insurance company.
You’ll have four basic choices when it comes to health insurance coverage:
1. Continuing coverage under your policy.
3. An individual health insurance plan
4. Short term health insurance
5. High Risk Pool
Continuing coverage under your policy – Remember, this option is only available up to certain age limitations, and if your child is a full-time student. Assuming that your coverage is part of a group health insurance plan from an employer, or if you’re self-employed, this choice might be the most reasonably priced. But the clock is ticking, and you won’t be able to cover your child indefinitely.
COBRA (Consolidated Omnibus Budget Reconciliation act of 1985) – Originally designed to ensure that people leaving one job for another could continue group health insurance benefits for a period of time if they were willing and able to pay the premiums themselves, COBRA can also be used to extend coverage to a child who loses that “dependent-child” status due to age limitations or are no longer full-time students. One drawback – the insurance company can charge you full-rate for the premium, up to 102 percent of the employers cost, so it can get expensive in a hurry.
Individual Health Insurance Plan – This can also be an expensive proposition, for two reasons: underwriting rules and premiums. Individual plans are almost always more expensive than group policies, and they usually have much stricter underwriting rules. If your child has health problems or undesirable medical history, the insurance company can decline coverage or attached exclusions to the policy. On the other hand, if your child is generally healthy, an individual plan can work to your advantage, because their premiums should be relatively low.
Short Term Health Insurance – Short term policies are designed to function as a “safety net” in case of serious injury and illness, rather than a comprehensive health insurance plan. Their premiums are usually low, with high deductibles, and a term that lasts from one to six months. They’re a good choice if your child has a job in the offing, and needs temporary coverage until they’re eligible for coverage under their employer’s group plan.
High Risk Pool – If your child can’t obtain coverage through standard means, such as an individual plan or under a new employer’s group plan, generally due to medical history, some states offer coverage under a “high risk pool”. The drawbacks to this plan are that there’s usually a long waiting period and the premiums are even higher than individual and group health insurance plans. Also, not every state offers a “high risk pool”.
A little forethought and planning in the area of health insurance will make your child’s transition from full-time dependent student into responsible adult with a minimum of effort. Now, if it would just work like that on the rest of their lives!