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Details on Health Care Law’s Under-26 Coverage Rules

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StudyingAs you may recall, the health care bill that was recently signed into law included provisions for the extension of dependent health insurance to those under 26. Specifically – “Young adults will be able to stay on their parents’ health plans until the age of 26. Many health plans currently drop dependents from coverage when they turn 19 or finish college.”

This week the government released the details of how this would work.

Health Plans that cover Dependents: If your health care plan currently covers dependents, the rules takes effect on or after Sept. 23, 2010. The rule would now require that the policyholder’s children be covered until the age of 26 unless they have access to an employer-sponsored plan. If they were previously dropped, they can re-enroll as long as they don’t have access to an employer-sponsored plan. The child does not need to live with the parent and does not need to be claimed as a dependent on the parent’s tax return. If the health insurance plan’s open enrollment period isn’t in the fall, the plan must give dependents 30 days to decide whether or not to enroll.

So far, 65 insurance companies have allowed students graduating from college to remain on their parent’s plans. (you read this list on the 4th and 5th page of the White House release.

Health Plans that don’t cover Dependents: If your health care plan doesn’t cover dependents, then it won’t be required to cover children until Jan. 1, 2014, when a child can re-enroll if they do not have access to an employer sponsored plan. The rules are the same, the implementation date is just further out.

How much will it cost? “The health department estimated that the average cost to cover each new enrollee would be $3,380 in 2011, $3,500 in 2012 and $3,690 in 2013.” (from NYT)

The White House also shared some sobering statistics – 30% of young adults are uninsured, making it the largest percentage of any age group. They don’t share the source of this statistics but I remember, when looking for a job, that health insurance was the biggest concern. Before the recent law, I wouldn’t have health insurance under my parents once I graduated. I didn’t know how much it cost on the private market and I was fortunate not to have any pre-existing conditions, but the prospect of being uninsured was a little daunting. It’s like being on a ship without having a life preserve under your seat, 99.99999% of the time you’re fine, but that slim chance of disaster is still scary.

(Photo: lenifuzhead)

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139 Responses to “Details on Health Care Law’s Under-26 Coverage Rules”

  1. daenyll says:

    I’ve had high deductable individual plans or insurance thru my graduate school since graduating from undergrad and loosing coverage from parents. Unfortunately it won’t make much sense for me to seek re-enrollment as I will age out shortly after this is adopted even if I don’t find employment by then with my own coverage.

    • carol says:

      I put my Daughter on my Health Insurance. She has a new job but wont be offered right away. I told my insurance Company about this and the said it was alright to add her for now. How will they find out if your child has insurance through work?

      • Kim says:

        When you become insured, your information is entered into a massive data base. When anyone applies for insurance, this database is checked for previous insurance, as well as current insurance. This database also provides potential insurance companies with pre-existing conditions, etc

      • Kim says:

        When you become insured, your information is entered into a massive data base. When anyone applies for insurance, this database is checked for previous insurance, as well as current insurance. This database also provides potential insurance companies with pre-existing conditions, etc

  2. Texas Wahoo says:

    “The White House also shared some sobering statistics – 30% of young adults are uninsured, making it the largest percentage of any age group.”

    Although this makes sense. Young adults are the healthiest age group as well. I bought expensive insurance through my graduate school (as was required) and never once ended up using it in three years.

    • CK says:

      Great point. A large % of young adults who are uninsured are uninsured by choice.

      • Jim says:

        The “uninsured by choice” is something that will be hard to quantify… while I can believe that the % is higher than, say, 45 year holds with a family, it’s not quantified.

        Also, when you think about insurance, you don’t buy it because you think you need it. Would you get auto insurance if you weren’t required? I have yet to submit a claim to my auto insurance company yet I pay my premiums because I’m required to.

        • Fred says:

          “you don’t buy it because you think you need it.”

          I’m not sure what you mean by this. Young people who buy insurance certainly buy it because they think they might need it in the future. Those of my friends who choose not to purchase health insurance are willing to take the risk. They don’t want to pay $250-500 / mo. to get coverage as they don’t think they are likely to need it.

          Also, I don’t think it would be hard to quantify who is “uninsured by choice.” A statistical survey that includes average household income and some basic assumptions would probably get you close to a number.

          Auto insurance is a bad analogy to health insurance. State laws do not require you to carry coverage on your own person and assets; they require you to carry it on other people’s person and property in the event you are at fault in an accident with them. Many of my friends have chosen not to purchase collision insurance (the kind would insures their car in an accident that is their fault) because they are careful drivers and believe that the cost of that insurance will ultimately outweigh their out-of-pocket costs if they do end up in an accident. Many young people take this approach when it comes to healthcare.

          • freeby50 says:

            Another detail, the unemployment rate of 16-24 year olds is currently 19%. Younger people are a lot more likely to be unemployed and thus have no insurance via their job or income to buy it. Theres not a lot of “choice” to do without insurnace if you’re unemployed.

          • freeby50 says:

            Oops, didn’t mean to direct that point at Fred specifically.

      • cubiclegeoff says:

        I agree with Jim. I’m not sure you can get good data to back this up. I think it’s more likely they’re uninsured because they can’t get coverage at a decent price and their jobs don’t offer coverage.

      • Jay says:

        How in the world are “a large % of young adults who are uninsured are uninsured by choice” if the so-called choice is because young adults can’t afford health insurance?

        I’m not sure if this really is such a free choice issue in other states, but in NY, most young people can’t afford the ridiculous cost of health insurance premiums in addition to the cost of living and taxes, at least in NYC. And that’s even after splitting the rent with 2-4 other young professionals/grad students.

        Oh yes, and what was one of the reasons why the turnout of young voters rose to a massive 51% in 2008? The lack of health care coverage! Student loans/college would be the other big reason.

    • Shirley says:

      Young adults may be the healthiest age group, but they are also very mobile and more likely to be in riskier situations. It’s the accident injuries with no insurance coverage that worry me.

  3. billsnider says:

    I have read that insurance companies are adding about 1% to the cost to add this provision. So it does not come cheap.

    It would be interesting to start a cost list.

    This would be number one and number two would be the additional social security medicare tax (I think this is 1.3%).

    Bill Snider

    • Jim says:

      Well, costs should increase if the number of insured persons increases. The statistic is that they will go up at least 0.7%.

      • billsnider says:

        What do you think about tracking the costs as they increase? Remember we were told that they would go down.

        Bill Snider

        • cubiclegeoff says:

          Remember that they’re supposed to go down in comparison to what they were projected to be, so this would be hard to figure out exactly.

        • Fred says:

          Indeed we were promised this originally by the Pres. when he was campaigning for the bill; but he couldn’t get CBO to agree on it. The argument was that preventative care would keep sicknesses from reaching situations where they are more expensive to treat. The CBO analysis, however, says this isn’t true because (1) preventative care costs more $ than expected, and (2) there will be increased costs to cover catastrophic situations that would not have been cared for in the past (e.g., people would have gone without care).

    • Fred says:

      I will say that if the cost is truly 1%, I’m tempted to think this provision is worth it. If an average insurance plan costs employee+employer $8,000, this amounts to an $80 / year increase, or about $8/month. It’s not completely trivial and certainly favors those with kids, but I’m inclined to support it.

  4. eric says:

    So Jim,

    Were you uninsured once you graduated until you found a job?

    • Jim says:

      Yes, it was for about a month. I didn’t go skydiving, but I otherwise behaved as usual. :)

      • eric says:

        Ah I see. I asked just because I knew a lot of people who went a long time after graduation without insurance.

        Also random question, but I’ve read things about how the new bill affects Medicare for elderly people but do you know if/how it affects Medicaid? For example, does this under-26 coverage rule apply to dependents of parents who have Medicaid?

        • Anjelica says:

          I would like to know the same thing. It’s very unfair if this was passed without a care for those with parents covered under medicaid.

  5. fairydust says:

    Thank you for running this!! Our son graduates the day after tomorrow, and I’ve been trying to figure out what to do to keep him covered until the new reform policies kick in, in Sept. I was hesitant to contact our health insurance provider in case that would signal them to immediately kick him off and let us basically flounder until September. Our provider is on the list you linked to (thank goodness!), but even after reading that pdf, I’m not entirely clear on whether we need to *do* something, or whether his being on our policy will just automatically continue… Any ideas on that?

    Thanks!!

  6. Jason says:

    Everyone has a different situation, I know, but I find all this discussion of 26 year-olds being covered by parents amusing.

    I was broke and working two PT jobs when I got married at 20 years-old. Recognized that I needed to find coverage for me and my wife, so I found an entry-level, full-time job with benefits making $18,000 a year. We lived on nothing.

    By 22, my first child was born and we had full, family coverage. I returned to school that year and worked full time to keep the insurance.

    No reason, other than pre-existing conditions (the only part of health care bill I agreed with), why a 26 year-old can’t find/buy their own insurance. We’ve now extended teenage-like dependency well into the 20s.

    • Jim says:

      I think that situations have changed since when you were a 20 year old. People are finding it ever more difficult to find jobs, especially young people. While I kind of understand the disdain to help others, when you didn’t get a hand, we’re all in it together and it doesn’t benefit us, as a society, to retard the development of young people. While this part of the health care issue isn’t the part I think is most important, it’s important to understand it, especially if you’re in your 20′s.

    • Debbie says:

      I totally agree with you Jason!

    • Jay says:

      Sadly, the issue is different in modern times. No longer is it easy to even find one PT job and find coverage making even $28,000 a year in a major city, and have the privilege of having your own place with only you and your wife and still afford health insurance. Many young people would gladly pay the 1% hike to their parents, because that’s at least affordable.

      Young people may be healthier, but the health insurance premiums doesn’t reflect that. Perhaps because young people are more likely to robbed and killed because they can’t afford a burglar alarm either, or at least live in a safer, more expensive neighborhood! But I greatly digress.

  7. freeby50 says:

    From the Kaiser foundation:

    http://www.kff.org/uninsured/upload/7451-05.pdf

    “Young adults, ages 19 to 29, comprise a disproportionately large share of the uninsured, largely due to their low incomes. Young adults have the highest uninsured rate (30%) of any age group. More than half of uninsured young adults are families with at least one full-time worker, but their low incomes make it more difficult for them to afford coverage.5 The median income of uninsured young adults in 2008 was $15,000. While young adults are the most likely to be uninsured, they do not comprise the majority of the uninsured. More than half (52%) of the uninsured are age 30 and older, and these older adults are at increased risk of serious health problems.”

    So we can see that half the uninsured people 19-29 old make under $15,000.

    The same report also says that 10% of the uninsured as a whole have income of 400% of the poverty level or more. So that would be around $40k for a single person or $88k for a family of 4. Someone making that much should be able to afford insurance (assuming no preconditions that make it impossible to get or afford). Some of those people may be between insurance due to unemployment or whatever. So there certainly are some people out there going without insurance even though they can realistically afford it. But by no means is that group anywhere near a majority.

  8. bailey says:

    my employer told us about this today. said it would increase costs of our plans, pushing us towards the “cadillac” plan levels and possibly kicking in a 40% tax.

  9. Kevin says:

    It’s about time something like this has gotten though. When I was going through college I got dropped from my parents plan as I graduated from community college. Only had the campus health center to keep my healthy through the next couple years of college.

  10. Ann McD says:

    Last fall our family saw first hand what the lack of health insurance can mean. One of our sons, age 22, fell off a ladder while putting up siding. He was pitching in, helping out a friend’s parents. He broke his arm so badly it required two surgeries, 12 pins, multiple steel plates and and open wound that I had to dress twice a day for 2 months. The parents homeowners insurance paid out $5000- the bills came to over $50,000! Our son had no insurance, though he worked two jobs and was going to school part time. Luckly,his income fell below the poverty line (that’s luck?) and he was eligible for federal assistance with the bills. This kept a medical disaster from also becoming a financial disaster. Still, he and I paid thousands of dollars out of our own pockets because this is a family that pays it’s bills. I don’t care what it costs me to keep our kids on our insurance until they are 26- it’s worth it!

  11. fairy dust says:

    So I read the white house info sheet and had my husband contact his employer’s HR person. Turns out even though the law kicks in Sept and his insurance provider is on the list of providers extending the benefits to new grads instead of dropping them until Sept, his company is NOT participating in this and won’t have to until they renegotiate for the new plan year… in Feb 2011!! So somehow the new law takes effect in Sept, but our son won’t be covered even when that happens, and will in fact probably get dropped from the plan next month after all.

    I don’t begin to understand how this is even possible. And won’t this same situation affect all the other employer companies who don’t renegotiate their plans until sometime after Sept?

    So very confused, and now not at all sure what to do about our son’s situation…

    • fairydust says:

      Following up, I went online and did a price comparison search for basic health insurance plans for our son (male, 22). We can probably cover him with all the same basic benies ($35 copay to see docs and specialists plus pharmacy) he gets now through my husband’s company plan for approx $50/mo, which I think is actually cheaper than the premium my husband is paying to have our son on his plan at work. I continue to be confused by all of this, but at least it shouldn’t hit us too hard in the wallet while the govt and insurance companies fight all this out.

  12. MIKE CORDES says:

    I am 67 and my wife is 66 neither of us have any insurance other than Medicare and the supplement with Essence here in Illinois. I have 10 children 2 of who are ages 21 and 22; both are in college.

    Why is not the Gov. Insurance required to cover my two children via the Obama Health Plan?
    P.S. I am in favor of Washington to “Stop the Spending” even if it means cutting our Soc. Sec. and Medicare (to bad I am not to buy coverage in the private sector).

    I hope congress will do what they took an oath and swore to uphold “provide for the defense and protect our borders” not get into the private sector business.

    Michael

  13. Debra says:

    The insurance company is telling me that to cover my 22 yr old until she gets a full time job with insurance, its gonna cost me 300.00 a mth. I don’t understand why?

  14. Anonymous says:

    my granddaughte just graduated from college
    her father’s employer supevalue said they would
    prefer to pay the penalty than insure her because it is smaller. can they do this?
    also is there acredit for employers who insure these students on income tax? and do employers
    know this? she doesn’t have a job that pays for health insurance & was told she can get on cobra for about $600.00 pr month.
    Do employers have all the info on this?
    Are they not informed ?

  15. Debra says:

    my friend called her employer International Papers insurance provider Bluecross Blueshield of Alambma and spoke with them about the face that they are going to remove her 22yr old from her health plan in June. First they said told her Obama hadn’t signed the bill yet, so we had to find the date he signed, she called back with that info and they finally told her that it is the decision of IP not to abide buy that law still Jan of 2011. Who can we contact about this?

  16. Heather says:

    I was just wondering if the parent HAS to add this child. If their work does not offer health care then does the parent HAVE

  17. Heather says:

    I was just wondering if the parent HAS to add this child. If the childs work does not offer health care then does the parent HAVE to add this child.

  18. lex says:

    PLEASE RESPOND

    hello i am 22 years old and not enrolled in school and i wont be for awhile. i just wanted to know if the policy covers people who arent in school. thank you

  19. Anonymous says:

    My employer offers med insurance for kids up to the age of 23..(full time students) If my 21 yr old college son decides to take this semester off will he be covered by this new plan?????

  20. momabug says:

    What happens if my son is offered insurance at his new job but it is very, very expensive and doesn’t have the same coverage as mine, does he have to take it under this bill? He will have no dental or vision coverage included.

    • Michael says:

      As I understand the law, IF insurance is available from your son’s employer, regardless of the cost, he is not be eligible for coverage under your policy. I do not believe that dental and vision coverage we included in the bill.

  21. Kyle says:

    I have the same question as momabug, I am currently working a full time job at a bank that offers health insurance but is $130 out of my paycheck every time. Does that count as employer-sponsored health insurance?

  22. joeaccnt says:

    most companies are willing to pay the penalty because it is cheaper than the cost of the coversage and not all insurance companies have to offer this even though the law says so.
    my husband is retired military “govenment” and our son is 22 out of college, low paying job, no insurance coverage offered – and can’t afford it on his own – the federal government which we pay does not have to abide by the law that they made – how’s that one for ya! this happens all the time, some Maine dental insurance comanies allow kids under 27 to stay on employee’s dental but not health insurance but the govenment does not have to offer anything to these kids that drop off- the cost is just too high to afford for the parent to pay any other way – luckily he qualifies for free care (which the rest of us are all paying for) and for kids that have kids (we are all paying for residents and their kids because they all qualify for medicaid which is killing Maine and this country -get rid of it (soon we will all be on Medicaid and no one will be paying any taxes) the U.S.A. is broke!
    to force people to buy somehting they can not afford is just crazy. what is next????

  23. Anonymous says:

    As a RN I have worked in many jobs where the insurance was terrible. (Many people are not aware that those in the healthcare field have pretty miserable coverage because most think it’s a given that you work as a nurse, you get good health insurance.) I am now in a job that has better benefits than most of my other previous ones, but is now going through some major changes to meet the demands of the health care bill, some of which will mean a higher cost to the employees. Nothing good comes free and, although I really like some portions of the new bill, I am completely fearful of the final cost to everyone, when all is said and done.

  24. Tara says:

    I think everyone is missing a very big fact…

    This bill is enabling our youth to rely on their parents even more! It’s already a major issue that the X-generation and Milleniums have issues with instant gratification, and responsibilities and now we want them to have even less responsibility? NOOOOOOO!!!!!!! I think this is a huge mistake.

    • Audra says:

      I am unsure how you can equate health coverage that isn’t available in most jobs kids have to take until they are 26 and/or out of school- with their responsibility. Not having health insurance is the number one reason for bankruptcy and bad credit- giving our youth coverage that hasn’t been available is the RESPONSIBLE thing to do.
      It is irresponsible and uninformed to think that covering our adult children will somehow make them lazy- that’s just stupid and selfish.

  25. Debra says:

    I AGREE THAT THE X-GENERATION AND MILLENIUMS DO HAVE ISSUES WITH RESPONSIBILITIES, BUT IF NOTHING IS DONE ABOUT THEIR HEALTH INSURANCE THEN IT WILL BE UP TO THEIR PARENTS OR THE STATE TO PAY THEIR BILLS, AND IT SEEMS LIKE WE HAVE A LOT OF UNWED MOTHERS UNDER THE AGE OF 26 SO IF NO REASON OTHER THEN THAT IT WILL SAVE THE STATE A LOT OF MONEY IF THEY ARE STILL ARE ON THEIR PARENTS INSURANCE.
    I DON’T BELIEVE IT WAS MEANT SO THESE KIDS COULD DEPEND ON THEIR PARENTS FOREVER, IT’S UP THE PARENTS TO MAKE THEIR KIDS RESPONSIBLE ADULTS.


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