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Health reform arrives early for some college students

Maryalene LaPonsie | April 27, 2010

As if helicopter parents needed any more encouragement, the federal government is making it a little harder to cut those apron strings. The recently passed federal health care reform includes provisions that allow young adults to remain on their parents' medical insurance long enough to complete their Master's Degree and more.

Federal health reform and student health insurance

Tucked among the almost 2,000 pages of the federal health care reform bill is a provision that requires young adults, up to age 26, to be considered dependents for insurance purposes. Along with requirements regarding high-risk pools, small business credits and pre-existing condition exclusions for children, the new dependent coverage rule goes into effect on September 23, 2010.

At that time, students and young adults can benefit from health insurance through their parent's individual or group insurance plans. Children...er, adults...are eligible for this medical coverage regardless of whether they are married or single, in school or in the workforce. The only stipulation is that they cannot be eligible for another employer-sponsored health plan.

While federal reform undoubtedly extends coverage for many students, it doesn't quite match the sweet deal currently offered by some states. For example, if you live in New Jersey, you can get free health insurance through Mom and Dad until you are 31...provided you don't get married or have kids before then.

New Jersey might be the gold standard, but some 30 states also offer extended medical insurance coverage for young adults of various ages depending on their education, marital and employment status. With the implementation of the new health reform, all states must allow medical coverage up to the federally mandated age of 26, but they are free to expand coverage beyond that if they choose.

WellPoint and UnitedHealth Group lead the way

Instead of waiting until September to extend student health insurance coverage, two of the nation's largest insurers have already announced that they plan to implement the change early. UnitedHealth Group Inc. announced in mid-April that it will begin granting extensions immediately. WellPoint Inc., which administers Blue Cross/Blue Shield plans in several states, will make the change on June 1, 2010.

With the two companies being the largest publicly traded insurers in the nation, it is speculated that other insurance companies may follow suit. For students graduating from college this spring, that may be the best present of all: free health insurance coverage through their parents.

When an adult becomes a child

In extending parental insurance coverage for young adults, the federal government seized on an opportunity to provide medical insurance to a group that is traditionally uninsured at a high rate. Proponents of the change point to the fact that many entry-level positions do not offer health insurance benefits.

However, this ignores the reality that student health insurance is often very affordable. Young adults are generally healthy and have few claims, which typically results in low premiums. For those graduating or between jobs, short term health insurance can bridge the gap between coverage under a parent's plan to employer group insurance.

In looking at the number of uninsured young adults, the real question may be: do students not have access to health insurance or are they simply unwilling to purchase it? With a Superman mentality, many twenty-somethings may not grasp the importance of buying the discount health insurance that is available to them.

Of course, now that they have access to free health insurance through Mom and Dad, why would they want to?

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