Health insurance is usually the last thing a new college graduate wants to think about. Finding the right job, heading to graduate school, looking for an apartment, or buying a new car are way ahead on the priority list. But if they aren’t careful, graduates may find themselves without any health coverage, and that can be a mistake that can affect cost a lot of money, says insurance agent Lisa Snyder.
This month, as students begin to head off to college, families should start to think about health insurance before the student even enters college, because as soon as the child turns 18, coverage often depends on their student status. “Whether or not a student is covered by their parents’ health insurance often depends on their status as a fulltime student,” says Snyder. “Their status can change several times during their years in college depending on the number of credits they take and whether or not they are considered full or part-time.”
Snyder has been an agent with Trenton-based Kistler Tiffany Benefits for 12 years, focusing on group health insurance coverage for business owners and their employees. She graduated from Penn State, where she received a bachelor’s in finance in 1987.
Some insurance policies end benefits for children on their 23rd birthday, whether they are still in school or not. Many students take more than four years to obtain a bachelor’s degree and often will lose coverage under their parents’ plans before they get that full-time job complete with health benefits.
There are options, however, and in New Jersey, there are more options than in many other states, says Snyder. Make arrangements before coverage on one policy ends, so the transition is seamless.
Dependents under Age 30. The best coverage is the Dependents under Age 30 program available to residents of New Jersey. “There are a number of conditions that must be met to be eligible for this program, but if you are it is often a very good way to go,” says Snyder. Basically, a person can keep the exact same coverage their parents’ have until they turn 30, regardless of whether they are a student. There is no interruption of coverage and no qualifying health questions, making this a particularly excellent alternative for a person with medical issues, she says.
While the cost of the policy is less than some of the other alternatives, it still costs more than the price of coverage as a dependent. “Usually it costs a little less, about 65 to 75 percent, of the price of a single employee with the same coverage,” she explains.
There are also other qualifications that must be met. The parent and the adult child must be New Jersey resident, though the adult child can be a student at an out-of-state university, as long as he maintains New Jersey residency. The adult child cannot be married, cannot have children, and can not have any other employer-based health insurance coverage. Also, the adult child is eligible for the coverage only as long as the parent is eligible. If the parent loses his or her job and health benefits, the adult child is also no longer covered.
Also, the adult child’s coverage must remain exactly the same as the parents’ coverage. If a parents’ plan offers several alternatives with high, medium, and low price tags, the adult child’s coverage is the same. This can make it expensive for the adult child if the parent has elected a high coverage plan, Snyder points out. The state offers a website explaining the program in detail at www.state.nj.us/ dobi/dependentsunder30.htmf.
COBRA. The federal government’s COBRA program provides continuation of group health coverage that otherwise might be terminated. Under this plan a person who turns 23 can qualify for up to 36 months of the same coverage he or she had under his parents’ plan. COBRA differs from Dependents under Age 30 in several ways, says Snyder. Because it is a federal program, neither the adult child nor the parents need to be New Jersey residents to quality. Also, the adult child can elect for a different coverage level than that of the parents. For example, if the parents have the highest level of coverage the adult child can elect a lower level with lower costs.
Also, this coverage is not directly connected to the parents’ coverage. If the parent changes insurance, the adult child is still covered. “This plan is more flexible, but it also costs more,” says Snyder. Cost is 100 percent of the single employee rate for the same coverage, plus the company may also charge an administrative fee of up to 2 percent.
New Jersey Continuation of Coverage. This program “is in the spirit of COBRA, but it is only for New Jersey residents,” explains Snyder. It is designed to cover people who are not covered under COBRA, such as a person who works for a company with 2 to 19 employees. Under this option the adult child also has 36 months of coverage. There is no discount on price, in other words the cost is the same as that of a single employee. There are also no health qualification questions, so it is a good alternative for a person with an existing medical condition who does not qualify for the Dependents under Age 30 plan. More details can be found at www.state.nj.us/dobi/division_insurance/ihcseh/sehblt07_02.pdf.
Individual coverage. If no other option is available, look into a individual health coverage. “Individual health plans are not hard to get, particularly in New Jersey, which is a guaranteed-to-issue state, but it is expensive,” says Snyder. Individual coverage falls into two categories, she adds, “basic and essential” and “standard.”
The basic and essential programs are “trimmed down” versions of the original standard policies, she explains. Cost is based on county of residence, gender and age, so the younger the person the less expensive the program. These types of policies usually require the person to use only physicians within a specific network and there is little or no prescription coverage, making them a poor choice for someone who requires an expensive medication. A low-end plan can cost as little as $130 per month for males or $175 for females.
Standard plans do not base cost on age or location, and “offer fewer limitations” than the basic plans, says Snyder. Some include prescription coverage. “Low-end” standard plans can cost as little as $325 per month and range upward to $6,000 a month.
Because cost and coverage vary greatly from plan to plan, Snyder recommends that a person looking for this type of coverage do some research before choosing. “Look at each company’s plan and see if it fits your needs,” she says. The information is easily available. The state offers a buyers’ comparison guide and additional information at http://www.state.nj.us/dobi.
While these programs may be expensive, they do have their place, says Snyder. Particularly for someone who only needs short-term coverage — for example, a student who turns 23 a few months before graduation but has a job with insurance benefits already lined up.
It’s not smart to go without health insurance, even for a few months, Snyder adds, because it is more difficult to get insurance if you are not already covered at the time you apply for the new policy. At the very least, a person should make sure that they have basic coverage set up before turning 23. “If you start with basic coverage and want to increase later it is easy to do so during open enrollment periods. And it is much easier to increase coverage you already have than it is to obtain coverage if you are not insured,” says Snyder.
Even if you will have health insurance benefits at your new job, you may be required to have a physical and answer additional health questions.
The most important thing, she adds, is to monitor your coverage to make sure that you don’t lose it. Insurance companies may not notify you that your coverage is close to its expiration date. It is up to each individual — not the insurance company — to make sure that their coverage does not run out.