Should Your College Student or Recent Grad Stay on Your Health Insurance Plan?
As parents, we do our best to provide for our children’s current and future needs. We do this because we know the many challenges our college student or recent grad may face.
For many of us, our children’s health is our number one priority, even if it seems to slip our young adolescents mind. So how do we best protect them during a major transition in their life?
Questions you may be facing include:
Should they buy their own insurance? Should they stay on your plan or enroll in a school-sponsored plan? What happens if they attend school in a different state? And what are their options after graduation?
Here are 5 Health Insurance Tips for Getting Your College Grad the Coverage they Need:
- Think twice before letting them stick with Mom and Dad’s health plan. The Affordable Care Act allows you to keep your child on the family health insurance plan until they turn 26. That’s a pretty good deal. However, you aren’t required to keep them on your plan because it may cost you more to do so. For example, if an accident happens out of state or your child lives away from home, in another city or state, their access to network doctors and hospitals through your plan may be limited or non-existent. So, don’t automatically think having your child on your health plan is the best answer. Find out if there are other, better options available to you first.
- Review ALL their coverage options. Keep in mind, when Congress wrote the health reform law popularly known as “Obamacare” they did not make college graduation a “qualifying life event” allowing your recent grad to enroll in a health insurance plan of their choice. In fact, unless your child experiences a qualifying life event, they may have to wait months until the next open enrollment period to sign up for major medical coverage. If they don’t have coverage from you, an employer, or other source, they should consider buying coverage on your own.
- Consider a “catastrophic” health insurance plan. These are major medical plans intended primarily for people under age 30. They provide less coverage overall than typical health insurance plans but may be more affordable on a month-to-month basis. They’ll meet your coverage requirements under the health care reform law but you can’t use government subsidies to help pay for them. Catastrophic plans might be a good choice if your child is relatively healthy and can’t afford more robust coverage but want something to back you up in case of an emergency. Just be sure that you could pay your deductible in a real emergency.
- Understand your tax obligations if you go uninsured. Being uninsured the day after graduation doesn’t mean that you’ll automatically have to pay a tax penalty. Under the Affordable Care Act, tax penalties are triggered when you go uninsured for three consecutive months or more in the same calendar year. There are also exemptions for people with very low incomes or certain other circumstances. If your recent grad is tempted to go uninsured after graduation, make sure they understand what their tax penalty may look like.
- Keep an eye open for the next open enrollment period. If your student or recent grad is not otherwise eligible to sign up for traditional major medical health insurance after graduation, this will be their chance to do so.