Some families face higher health premiums to insure adult children

By David S. Hilzenrath
Washington Post Staff Writer
Tuesday, May 11, 2010

Some families could pay a price if they seize the chance offered by the new health-care law to keep children up to age 26 on their insurance policies, regulations drafted by the Obama administration show.

Until 2014, when health plans will be prohibited from charging higher premiums based on preexisting conditions, insurers in the individual market can take into account the young adult's medical condition when setting the family's premium.

In addition, under certain circumstances, families could be required to pay extra to carry young adults on their policies.

The regulations published Monday also explain that there is an exception to the expanded coverage.

The provision "applies only to health insurance plans that offer dependent coverage in the first place: while most insurers and employer-sponsored plans offer dependent coverage, there is no requirement to do so," the Department of Health and Human Services said in a statement Monday.

The announcement is part of the administration's effort to translate the new health-care law into more specific regulations. The full meaning of the sweeping legislation will not be known until the regulations are issued.

The administration is rolling out rules for provisions that take effect this year, and it has highlighted the extended coverage for young adults as a provision that will provide early relief for many families. Allowing families to keep adult children on their health plans or put them back on their health plans until their 26th birthday will be especially helpful for those with children graduating from college.

Young adults often go without insurance for a variety of reasons. They might think they don't need it, not be able to afford it, or not be in jobs that offer good coverage, if any. The new provision could help close that gap.

About 2.4 million young adults might be affected by the provision, of whom about 1.8 million are currently uninsured and about 550,000 have individual policies, the government said.

Group health plans, such as those sponsored by employers, can charge employees extra to cover adult children only if they already base their premiums on the number of children the employee enrolls -- as opposed to offering a flat premium for families of all sizes.

If the costs are spread across all families with employer-sponsored coverage, family premiums will rise about 1 percent in 2012, the government estimated. In the individual market, premiums for adding young adults are estimated to average $2,400 in 2012, the government said.

"On the whole, this is a very cheap group to cover . . . as long as they don't get pregnant or have a motorcycle accident," said Timothy Stoltzfus Jost, a professor at Washington and Lee University School of Law.

Parents restoring to their employer-sponsored health plans young adults who previously became too old for the coverage will get a do-over of sorts. If they dropped coverage or switched to a cheaper plan when their child outgrew it, they will be able to re-enroll and choose among all the options previously available.

Dozens of insurers have agreed to implement the extended coverage in the coming weeks instead of waiting for the legal requirement to kick in with policy years beginning on or after Sept. 23. Big employers that pay for employee health benefits out of their own coffers -- even if they use insurance companies to administer their medical benefits -- have generally held back.

Families can take advantage of the option even if the young adult no longer lives with his parents and is not a dependent on their tax return. The new policy applies to married and single children, though the children's spouses and children do not qualify, HHS said.

For coverage years beginning before 2014, group plans that have grandfathered status are not required to cover young adults who have access to insurance through their jobs.

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