IQ expert Jason Beans: Health care reform adds degree of security for college graduates

Q: My 22-year-old daughter just graduated from college. What options does she have for health insurance? Can she stay on my health insurance plan?

A: Many health care plans used to drop a dependent once he or she turned 19 or graduated from college. In fact, before health care reform changes started taking effect for young adults under age 26, roughly 30 percent had no health insurance at all. According to the U.S. Department of Health and Human Services, that’s higher than the rate of uninsured kids.

Circumstances recently changed for young adults because of the Patient Protection and Affordable Care Act of 2010, which extends dependents’ eligibility to age 26. Even if a child can’t be claimed as a “dependent” in the IRS’ eyes, that child still can be covered on a parent’s health insurance plan up to age 26, regardless of his or her student status. This change took effect nationwide on September 23, 2010, and kicks in when your insurance plan starts its new year.

So your daughter will be guaranteed coverage on your plan until age 26. It doesn’t matter how a parent receives his or her coverage – either independently or through work – his or her child will have access to the coverage. It’s also important to note that the new federal requirements apply to self-funded and private insurance plans.

No need for financial dependence

Historically, some plans required children be considered “dependents” before they could qualify for coverage on their parents’ plans. Now, it doesn’t matter whether your child is a student, lives at home with you or is financially dependent. So your child can have his or her own job and still be covered under your health insurance.

This can be very helpful if your child is passionate about a job offer, yet the offer does not include health insurance. Your child can take the job and still stay on your plan. However, health plans’ rules vary. If your child gets a job that does offer health insurance, your child may or may not be permitted to stay on your plan.

All dependents treated equally

The Department of Health and Human Services issued regulations that do not allow your young adult to be charged more than any of your other dependents. In other words, insurers must treat all dependents the same, regardless of your child’s age. Companies cannot jack up costs or limit coverage for the under-26 young adult group.

State rules may trump federal rules

Some states’ rules can be even more advantageous to a child. For instance, New Jersey extends the dependent age to 30. So check with your state insurance regulator to learn more about the laws in your own state. Young adults in states that have tighter eligibility requirements than the federal law can take advantage of the federal law. Young adults in states with broader eligibility can enjoy their own state’s laws.

Eligibility for rejoining a plan

If your young adult already has dropped off your plan, he or she can rejoin when open enrollment begins. If your child is under 26 and married, he or she still is eligible to join your plan. Also, if your child lives in a different state, he or she is eligible. However, your child’s spouse does not necessarily have the ability to join your plan.

Hold your dependent accountable

So, congratulations on your daughter’s graduation. Hopefully, the ability to stay on your health insurance plan will give her some peace of mind — and ultimately more freedom to pursue professional, educational and personal advancement.

Bear in mind, however, that while this may sound rosy all the way around, this age extension could hit your wallet. Having your daughter on your health insurance plan could mean a bump in your premiums. If this is the case, make this an opportunity to teach a lesson in responsibility by requesting that your daughter make payments directly to you to offset the extra costs.

Jason Beans is CEO of Chicago-based Rising Medical Solutions, a medical cost containment/care management company serving the workers’ compensation, group health, auto and liability markets. Beans founded Rising in 1999. Since then, Beans has received a number of honors, including Business Council Advisory Man of the Year and Midwest finalist for Ernst & Young Entrepreneur of the Year. Rising has appeared several times on the Private Company Index’s Top 10 Growth list and Inc. magazine’s Inc. 5000 list.

Beans earned a master’s degree from MIT’s Entrepreneurial Masters Program and a bachelor’s degree in finance from Boston College.

For more information, visit www.risingms.com.

If you have a health insurance question for Jason Beans, please send it to john.egan@insurancequotes.com.