Adding an Adult Son or Daughter to Your Insurance

The new health reform provision that lets young adults up to age 26 stay on their parents' insurance is now in effect.'  But as we've seen in the story of Matt, getting your kid on your policy may be easier said than done.'  It may not happen as fast as a family hopes, and there's the question of whether better alternatives exist.

It's important to realize that September 23 is not the start date for signing up all young adults.'  Health plans are not required to include them until the renewal date of each employer's benefit plan.'  In Matt's case, the policy renewal for his mother's employer is January 1, but for other employers it might not be until next summer or even next September.'  There's little uniformity, as you can see.

While almost all adult children up to age 26 are now eligible for this coverage, there's one BIG exception. If young adults under 26 are working, and their employers offer health insurance, they must take that insurance even though it may be more expensive than being protected under mom and dad's policy.'  In other words, they have no choice 'kind of ironic in a health system that's supposed to be all about choice.

That leads, of course, to the matter of cost.'  What are the options and what are the costs for the new coverage?'  If a child is nearing his or her 26th birthday, is it worthwhile to put him or her on a policy for a few months?' '  It may not be.'  Adding someone for a few months involves a whole lot of administrative expenses that insurers most likely will pass on to policyholders.

Insurers are passing along those costs anyway.'  One New York City family just received this notice from their carrier informing them of a 65 percent to 69 percent rate increase.'  One reason, the company said, was the new provisions of the health reform law.'  That includes covering young adults, ending lifetime limits on coverage and requiring the carriers to issue coverage to children with preexisting conditions.'  If a company now must insure a kid with cystic fibrosis, you can bet it will pass on the increased costs of the child's care.

While it's not easy for the average person to determine whether those cost increases are justified, families can do some quick calculations to see which options are best for insuring their young adult children.

Say a husband is covered under one employer plan and the wife under another' not an unusual scenario.'  Adding a child to one of the plans will almost always mean a switch from single coverage to family coverage, and that will cost more.'  The exact amount varies from plan to plan.'  So if you have a choice between parents' policies, you probably will want the one with the lower premium.' '  But keep in mind other cost sharing'the deductibles, coinsurance and copayments. If your child is healthy, these may not matter much, but if you anticipate health problems and high potential out-of-pocket expenses, the policy with lowest cost-sharing might be preferable to one with a lower premium.

If both parents are on the same plan, putting a child on the insurance may be the right choice.' ' '  However, the law allows employers to charge more for all dependents.'  So a policy that's reasonable for a husband and wife might become very expensive once the child is added.

That's when a family might want to look at options in the individual market where prices are high and underwriting is rough.'  For instance, those with preexisting conditions still can't get coverage.'  To bring prices down, insurers are pushing very high deductible policies with lots of cost sharing and limited benefits. For someone who is a healthy gambler, it might be an acceptable option.'  But if something goes wrong, buyer beware!