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FINANCIAL ADVICE FOR YOUR 20s & 30s
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About one in five adults age 19 to 29 don't have health insurance. Sure, you're a young, strapping specimen of good health. But you're not invincible.
Going without coverage is downright risky -- not only for your health but also for your finances. After all, one unexpected visit to the emergency room for an accident or illness could cost you hundreds or thousands of dollars, not to mention the cost of any follow-up care. (Learn why protecting yourself against life's surprises is one of the three steps of solid financial planning.)
Most of us are covered on our parents' insurance plan while we're in college. But depending on the insurer and the state in which you live, you could lose your coverage on your family's policy when you graduate or when you turn a certain age -- usually between 21 and 25 (up to age 30 in New Jersey).
If you're graduating this year or have a birthday soon, your free ride may be coming to an end. After you apply for a new policy, it can take a month or two to kick in, so act now to avoid leaving yourself vulnerable.
The easiest way to get health insurance is usually through a job. But you might have a gap between graduating and finding work. And you may have to wait a few months after starting a job before you're eligible for health benefits, or your employer may not offer that benefit.
The good news is you have plenty of options to fill the gap, often at affordable rates.
First, ask your parents to contact their benefits office and ask about COBRA, the federal law that allows an adult child to remain on a parent's policy for up to 36 months. Most insurers on the individual market will exclude any preexisting medical condition, so maintaining your no-questions-asked coverage with your current insurer may be your best bet if you have a condition.
Note, however, that it can be expensive. COBRA coverage typically costs between $200 and $500 per month, says Sam Gibbs, of eHealthinsurance.com. If you're in good health, you could save substantially by buying individual coverage.
Flying solo
Student policies or short-term coverage to bridge the gap between graduation and a job with health benefits used to be the go-to solution for new grads. But they may not be the best deal. A new study by the U.S. Government Accountability Office found that student health plan annual premiums can range from $30 to $2,400, with some plans excluding or limiting preventative care, prescription drug coverage and other basic health services.
An individual policy with a high deductible can cost as little as $50 to $150 per month, says Gibbs, in states with competitive health-insurance markets (that excludes New York and New Jersey). Such plans carry no expiration date like student and short-term policies do. And benefits can be tailored to fit your needs. It pays to shop around.
By purchasing insurance with a deductible of at least $1,100 for individual coverage or $2,200 for a family plan, you qualify for a health savings account. You can make pre-tax contributions to the account and use the money tax free to cover your deductible and other out-of- pocket medical expenses. Any unused money rolls over from year to year.
Even if you can get health coverage through your job, it doesn't hurt to shop the individual market too, says Gibbs. With the rising cost of employer health insurance, some twentysomethings are finding better coverage or better prices on their own.
To find the best fit for you, compare rates and benefits on student, short-term and individual policies at eHealthinsurance.com, or contact an independent insurance agent through www.nahu.org.
If you're still having trouble getting coverage, see our primer on buying your own health insurance for more options.
POSTED BY: Billy (May 05, 2008 08:22 PM)
If you're going out on your own, I'd also suggesting looking for a higher deductible plan, at least at first. You'll pay a lot less in premiums, but note that your services will be reduced...
POSTED BY: jocelyn (July 02, 2008 10:47 PM)
...I can't get health insurance because I'm a law student and cannot afford health insurance. I think that anyone who is in grad school should be able to be covered under their parents' insurance because most people in grad school are over 25 and currently do not qualify due to the age limit.
POSTED BY: mark smith (July 27, 2008 01:29 PM)
I believe that if we as a society have decided to allow insurance companies to allow same sex partners to insure one another, we would allow parents of college students to cover their children until they graduate.
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