Graduation gift for college students: You may not lose your health insurance

health insurance for college studentsMajor insurers -- Humana, Kaiser Permanente, UnitedHealthCare, and WellPoint -- announced they will extend insurance to those graduating from college and soon to be kicked off their parents' health insurance plans. Officially, the new healthcare reform law requires health insurers to allow young adults to stay on their parents' plan until they are 26, but that provision doesn't kick in until Sept. 23.

"We are also working hard with other insurers on similar proposals and sent a letter today offering to work with each of them to expand this opportunity even further, " Health and Human Services Secretary Karen Sebelius said in a statement Monday. She went on to explain, "The letter follows productive discussions with insurers since the bill passed about closing the gap in coverage for college graduates or young adults whose birthday in 2010 made them ineligible to continue on their parents' plans."
"That change is really significant," Sara Collins of The Commonwealth Fund told USA Today. "Particularly with the downturn in the economy, to find a job is difficult, even more so one that offers insurance."

Insurers all said they want to help young adults avoid getting caught in a coverage gap if they have to wait until September for the new law to kick and go without insurance for several months. Whether you'll be able to take advantage of this new law will depend on the type of insurance your parents have and the state you live in.

Each state has different laws about when your parents can no longer include you on their insurance policy. Most plans, prior to the new law, require you to be in school in order to continue coverage past whatever age limit is set. If you're already off your parents plan, insurance companies are not allowing you to get back on until the law takes effect Sept. 23.

Each insurer is handling the change differently. Here's a brief rundown of what to expect:
  • Humana -- The change will go into effect immediately. As long as you still are insured on your parents' plan, you will be able to stay on that plan until age 26 or until you are able to get insurance yourself.
  • Kaiser -- Plans to extend coverage before Sept. 23 for people on individual plans, but an actual date has not been set for the extension to take effect. If your parents get their coverage from Kaiser through an employer, it will depend upon what the employer decides. Kaiser is in discussions with employers now. Your parents may want to talk with the human resources at their company to find out what the company plans to do.
  • UnitedHealthcare -- The change will go into effect immediately for individual and group plans. But, if your parents' employer is self-insured, their employer would have to agree to the change. About 11 million people are enrolled in self-insured plans. Check with your company human resources department to find out what they plan to do.
  • WellPoint, which operates 14 Blue Cross and Blue Shield plans nationally -- The change will take effect on June 1.
Now that these four major insurers agreed to start the new coverage early, it's likely others will jump on the bandwagon. The solution for young adults could be in place even faster than the one for the uninsured. That's a great graduation gift for those who thought they would soon be facing life without health insurance.

If you're healthy it's not a big deal. But if you have asthma, diabetes or some other chronic condition, the costs of going without insurance would be considerable. They would have a great deal of trouble getting an individual plan because with these chronic conditions, they likely would be uninsurable or the insurance would be unaffordable.

Lita Epstein has written more than 25 books, including "The Complete Idiot's Guide to Social Security and Medicare" and "The Pocket Idiot's Guide to Medicare Part D."
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