Families are confused over health-care law's coverage for young adults
Sunday, June 27, 2010
It is among the top early selling points of the health-care overhaul -- a new rule that has particular appeal for middle-class, middle-age voters: Young adults who lack health insurance will soon be able to remain on their parents' plans until age 26.
But although Obama administration officials note that the provision will help millions, the benefit is proving less immediate than many families expect.
The administration's success in convincing dozens of insurers to comply with the provision earlier than the law requires has left many parents with the impression that their adult children will be eligible for continuing coverage far sooner than is likely to be the case, experts said.
According to the law, health plans don't have to comply until their first renewal date after Sept. 23. For some plans, that's as soon as October. For many, it's January. For others, the compliance date won't be until May.
That means many college seniors whose parents' health plans allowed them to stay on until they graduated this spring may face a gap in coverage until the new requirement kicks in.
Soon after the law was passed, Health and Human Services Secretary Kathleen Sebelius called on insurers to close the gap by complying with the law early in such cases. More than 60 major insurance companies and several large employers agreed to do so.
But just because an insurer offers to keep new graduates on the plan doesn't mean the employer subscribing to the plan will take the insurer up on the option.
For one thing, employers who contribute a share of the premium required to cover the new graduate may not want to incur that extra, unplanned expense. In addition, according to government statistics, most workers with health coverage are employed by large companies that self-insure, meaning the employer essentially acts like an insurance company, collecting employees' premiums and paying medical benefits out of the pot.
Regardless of which type of coverage their parents have, early indications are that the majority of new graduates will not get to go back on mom and dad's health plan any sooner than the new law requires. In a survey of nearly 800 large and small employers last month by Mercer, a benefits consulting firm, 76 percent said they were "not very" or "not at all" likely to comply early.
The publicity generated by the decision of so many major insurers to offer early coverage to new graduates only raised the expectations of parents such as Cathy Snyder, 56, who works for a school system in Massachusetts.
Snyder's daughter, a biology major who has just returned from an overseas internship to work on a forestry project, can't get insurance through her job. A few weeks ago, Snyder learned from her employer's human resources department that, because her health plan's renewal date is in May, she won't get to put her 24-year-old daughter back on for a year.
"By then she'll be 25; she'll have lost more than half of her eligible time," Snyder said. "I guess if I hadn't [originally] heard that it was supposed to fairly immediate, I would have, thought, 'Well, okay.' But this was so disappointing. . . . It didn't seem in the spirit of the law."
In a statement Saturday, the White House said: "Under the Affordable Care Act, young adults across the country will have access to health insurance. The Administration called on insurers to offer this coverage before they were legally required to do so and we continue to work with employers to encourage them to provide coverage."
In the meantime, Snyder and her husband plan to split the cost of buying their daughter coverage on the individual market.
It's unlikely to be cheap. While young people are healthier than average, they are also far less inclined to spend their money on health coverage. Therefore, insurance companies tend to assume that young adults who do want to buy a policy must be more risk prone or less healthy than their peers, and they set their rates accordingly.
An alternative available under the federal law known as COBRA, is for parents to keep a dependent adult child on their employer's plan for another three years. But this is often the most expensive option -- reaching hundreds of dollars per month -- because parents must pay the entire premium, including whatever portion their employer was previously contributing.
Many military families are also just learning that the young adult children provision -- and the rest of the overhaul -- won't apply to TRICARE, the Defense Department health plan serving 9.6 million active and retired service members and their families.
"I'm more than disappointed. . . . I'm ticked off," said Bruce Bramblet, a retired helicopter instructor for the Army.
Since graduating from college last year, Bramblet's son, an aspiring graphic designer, has had only part-time jobs that don't offer health insurance. He lost his eligibility for TRICARE last month when he turned 21. Though Bramblet, who works for Boeing in Seattle, has been able to keep his son on one of the company's plans, the coverage is less generous.
"We've had family doctors following my son for 10 years," Bramblet said. "And now all of a sudden it's, 'You're out the door.' . . . It was very confusing."
The years to come could bring further rude awakenings for parents as employers and insurance companies look for ways to offset the added costs of covering these workers' children longer into adulthood, experts say.
For instance, roughly half of employer-based insurance plans currently charge a blanket family rate regardless of how many children are included on the plan. But the survey by Mercer found that one in five are now strongly considering or likely to start charging on a per-child basis.
Similarly, while Mercer found that on average employers cover more than two-thirds of the cost of family plans, 16 percent said they are strongly considering or likely to require their workers to start contributing a greater share.