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Insuring Your Grown Children.
We joke about our kids at parties, much the way I suppose they joke about us. But I'd be willing to bet the fun the poke at us is not of the financial kind.
Among the things parents talk about include the cost of college and the child's willingness to pay for it, the use of jobs to fund what was previously a lifestyle void of monetary need, and how to keep them safe.
And as we prepare them for their exit from the nest, we still worry about their wellbeing once they leave. But suppose they donıt leave until long after they have reached the age of majority? What then?
Unfortunately, as many graduating seniors, both from high school and college find out, the umbrella of protection that you, as parents provided while they were growing up, quickly disappears once your children reach adulthood. The health insurance that gave you peace of mind may end for your high school graduate if they do not plan on attending college and for your college graduate before he or she land their first job.
Depending on the state where you live, you adult child may be losing his or her eligibility to be carried on your insurance policy. Sixteen states have addressed this issue mandating coverage on group plans beyond the usual cut-off date. New Jersey recently passed the most aggressive insurance coverage designed to address the growing problem of underinsured young adults.
The NJ law, which now provides coverage for adult children until age thirty, also makes it more affordable by offering coverage for this age groups at premiums greatly reduced from the cost of an individual policy. The state usually estimates that coverage for this group at $7,000 per year. Under New Jerseyıs new guidelines, those premiums would average around $2,000.
Some companies have cried foul to the legislation suggesting that the addition of these adults strains the already skyrocketing price of their employee plans. Despite the generally good health of this age group, the cost estimates of adult additions of children who did not attend college or have recently graduated, seem excessive.
Often cases like Michelle Morse of New Hampshire come to the forefront when state government's contemplate these legislative decisions. Because of her parentıs insurance coverage, she needed to be enrolled fulltime as a student to qualify under their plan. The new law named after the Plymouth State University student would allow students to take an insured leave for illness up to a year. Ms. Morse died of her cancer at age 22.
These new laws covering adult children come with restrictions. New Jerseyıs law doesnıt permit the adult child to have children to qualify for coverage. And while only a handful of states currently allow for coverage past the age of 19, many until 24 or 25, only Utah permits it until age 26 for unmarried offspring.
Many insurance companies challenge the broad definition of the word dependent in many of these legislative decisions. In some states, the term applies to grandchildren living in the insured's household as well as those who are disabled. Both insurers and employers believe that this is a social issue and should be handled differently.
Parents do have other options for their children.
In many instances, COBRA coverage is available. COBRA however is not cheap. COBRA allows the newly uninsured to obtain coverage at full price (including the employer's share) for up to 36 months.
COBRA stands for the Consolidated Omnibus Budget Reconciliation Act and is designed to insure employees who may have lost their job and because of a pre-existing condition, would otherwise be unable to get insurance.
This extended coverage is also available for children who have a parent that has had their work hours of employment reduced, has lost their job for any reason other than his/her gross misconduct, or lives with a parent who is now enrolled in Medicare. COBRA can also cover children whose parents have divorced or legally separated or stops being eligible for coverage under the plan as a "dependent child".
There are additional options available for parents who are concerned about their child's lack of coverage. Individual policies for this age group can cost as little as $200 a month. But too often these adult/children base their decision about whether or not to get coverage on their general health rather than their lifestyle or activity level. While well care seems to be unnecessary for this group, a broken limb can often mean large medical bills and lost time at work.
Pre-existing conditions are not necessarily a reason for an insurer to charge higher premiums for insurance or deny the application outright. Some federal and state laws apply to these circumstances allowing coverage if the applicant had insurance for at least eighteen months.
There are still other options for parents looking to insure their children. High-risk pools in many states offer insurance with ceilings on premium limits. Medicare is also an option. Some states have mandated insurers in the state to cover any resident regardless of health conditions.
The question remains: how much of your children's adulthood should you help pay for? With many students emerging from school with sizable debt, parents are looking to help their child get off on the right foot.
A low cost policy covering accidents can help. In many instances, the deductible will not be any higher than your own policy. Allowing them to remain on your car insurance policy can offset costs of coverage as well. Opening a health savings account can help offset many costs as well and create a portable account the young adult can take with them.
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