What’s Next?
News Flash -- When your children graduate from college but remain unmarried
and dependent on you for support, you’ll soon be able to continue insuring them
on your own group health insurance policy. Skip Schrayer, president of Auto &
Home Insurance Agency, says most insurance companies will begin offering the change
with the first policy renewal after June 1 of this year. “The law is for Illinois
contracts only so you have to check with the health insurance carrier to make sure
it applies to your situation.”
Since several conditions apply to this new Illinois law, let’s look at the details:
Dependent, adult children may remain on your health insurance policy until they
reach the age of 26, even if they do not live with you or are not students. Military
dependents may remain on your policy until they reach the age of 30, however, they
must reside in Illinois.
COBRA
Adult children who live inside or outside Illinois have other insurance choices
as well. They can receive health coverage through federal legislation known as COBRA
(the Consolidated Omnibus Budget Reconciliation Act of 1985). COBRA allows your
dependents to continue for a limited period their coverage under your employer’s
group health plan. However, the child must have aged out of coverage while the parent
was covered and the dependent must have been covered on the employer’s group policy.
Also, the employer must have over 20 employees in order to participate in COBRA.
Short-Term or Temporary Coverage
Another alternative when group health insurance or COBRA isn’t a good option is
Short-Term Coverage. Also known as Temporary Coverage, this insurance can be written
for as little as 30 days or as long as one year, and is designed to protect the
policyholder from large medical bills due to an unexpected illness or injury. Maximum
lifetime benefits are usually $2 million.
Short-term plans are priced according to an applicant’s gender, date of birth and
zip code, and they are almost always less expensive than coverage under COBRA. What’s
more, they can be put into place almost immediately. Once an application is approved,
coverage usually begins one minute after noon the following day.
The drawback: Pre-existing conditions are not covered, and the applicant must answer
several basic health questions to be considered. Another drawback: because it does
not provide continuous coverage for all conditions, short-term health insurance
may not be considered “creditable” health coverage. Creditable coverage is full
insurance protection that remains in force for 18 months or more. The benefit is
that if you have had creditable coverage and change health insurance carriers, the
new carrier should provide coverage for pre-existing conditions. Coverage not considered
creditable includes stand-alone discount drug cards, “special” policies providing
minimum benefits, and some short-term or temporary plans.
Permanent Health Insurance
Your children graduating from college can also apply for permanent health insurance,
which is written for individuals who do not have group health insurance, and need
coverage for an unknown period of time. The benefits of permanent insurance resemble
those of group coverage in that the applicant may choose among deductible amounts,
lifetime maximum benefits and prescription plans. The applicant may also carry other
health insurance, or co-insurance.
The most important drawback of permanent insurance is that coverage can be declined
for health reasons. Permanent insurance plans are medically underwritten, which
means that an applicant must answer numerous questions about his or her health history,
and may be subject to a physical examination. Another condition to consider: permanent
health insurance usually takes four to six weeks to become effective. This type
of insurance is considered creditable coverage and may cost less than plans issued
through COBRA. Yet, rates are usually higher than those for temporary or short-term
policies.
For help understanding and choosing among health insurance plans for your college
graduates who rely on you for support, please call Cari Hostetter at 847-427-3444.
She is ready to explore every option and help you obtain the best possible coverage.
