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A bigger blanket to cover young adults

In most cases, the children of a health plan's enrollees must be offered coverage until age 26.

May 17, 2010|By Francesca Lunzer Kritz | Special to the Los Angeles Times

Ed Emmerman's a happy guy, and not just because he'll be able to stop paying college tuition for his older daughter, Sarah, 21, when she graduates with a bachelor's degree from the University of Vermont later this month. He's also pleased that Sarah will be insured for the foreseeable future.

Under the Patient Protection and Affordable Care Act, as the recent healthcare overhaul law is known, Sarah, currently looking for a job as an event planner, can remain on her parents' plan until age 26. So can millions more soon-to-be college graduates who traditionally have lost health insurance coverage once they pushed that tassel over the mortarboard.

Regulations clarifying the new provision were issued May 9 by the departments of Health and Human Services, Treasury and Labor. The new rules come as a huge relief to upcoming graduates and their parents, as well as to dependents younger than 26 who previously were on a parent's plan but had to give up the coverage once they reached age 19 or were no longer in school.

"Even when she does find a job, there's no guarantee it will come with health benefits," says Emmerman of his daughter. He owns a public relations firm in Plainsboro, N.J., and his family's coverage is provided by his wife's employer. "This is one less thing for us all to worry about while she goes about looking for that first position."

Here are basic provisions of the changes affecting young adults:

• Plans that offer dependent coverage, both employer-sponsored and those sold to individuals on the open market, must offer coverage to enrollees' adult children, until age 26, even if the young adults are no longer students, are not classified as dependents on a parent's tax return and don't live in a parent's home.

• If adult children have access to employer-sponsored coverage on their own, they do not have to be offered coverage by a parent's group plan. However, a parent's plan will have to allow them to be covered beginning in 2014.

• This extension applies to married children who meet eligibility requirements but not to that child's spouse or own children.

• The new provisions officially take effect on or after Sept. 23, but HHS Secretary Kathleen Sebelius has called on insurance companies to implement the new coverage as soon as possible.

This would benefit students now graduating college who otherwise could have a gap in insurance coverage. Several insurers, including Kaiser Permanente, Aetna and Cigna, which insure millions of people in California, have announced plans to implement these rules sooner than September.

Some firms may not provide this benefit until the new benefit plan year begins, which could be Jan. 1, 2011, or even later.

Cathy Stamm, a senior associate in the Washington, D.C., office of benefits consulting firm Mercer Inc., says parents and their children should be aware of any gap they may have in their health insurance between now and when the new benefit kicks in.

Options to cover the gap include COBRA (but not the 65% COBRA subsidy, which is only for employees who have been dismissed involuntarily) and short-term plans available through insurance brokers and online health insurance firms such as ehealthinsurance.com.

To find out if a specific under-26-year-old qualifies, call the membership number on the back of your insurance card (if you buy individual coverage) or your employer's plan administrator (if you get coverage through your job).

• Employers who offer dependent coverage must give young adults a 30-day window in which to enroll in a plan, and they cannot charge more for these enrollees than for any other dependent.

Some firms may begin offering the option shortly, others will phase it in whenever all other employees renew their annual coverage. So watch for an announcement.

• Families covered under an employer plan that charges just two rates — individual and family — won't have to pay any additional premium when enrolling an adult child younger than 26 if that dependent is already enrolled in the family plan.

Coverage that charges based on the number of family members covered could cost $2,000 to $3,000 per child over the course of a 12-month period, based on recent estimates of healthcare costs. And Ron Pollack, head of Washington, D.C.-based health reform advocacy group FamiliesUSA, urges families to seriously consider the option, if available.

"Young adults lead active lives, which can pose a risk of serious injury," says Pollack, "and people 26 and under are not immune to diseases and chronic conditions. This new coverage offers peace of mind and potential savings in the hundreds of thousands of dollars, should care be needed."

Need more information on the coverage extension? A new group called Young Invincibles, which advocates for health coverage for adults ages 18 to 34, offers a list of questions and answers and other basic information on its site. Go to http://www.younginvincibles.org and click on "YI Reform."

health@latimes.com

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