Urgent care: Young adults can get insurance under parents' health plans

Amy Higgins

In September 2010, a health care reform provision went into effect that allows parents and guardians to include adult children and dependents on their health insurance plans until those dependents reach age 26. At least 600,000 young adults nationwide are taking advantage of the opportunity, according to estimates from Kaiser Health News.

Coverage is available to those whose parent or guardian has health insurance that covers dependents. It applies to all plans in the individual market and to employer plans created after March 23, 2010, according to the National Conference of State Legislatures (NCSL). Additionally, young adults who are not eligible for an employment-based health insurance plan can qualify for dependent coverage, even if their parent's employer-sponsored health plan existed before the enactment date, the NCSL explains. In 2014, when the health insurance mandate takes effect, young adults can continue their dependent coverage until age 26, even if they qualify for an employer-sponsored health plan of their own.

Before this provision took effect, dependent coverage rules varied among the states. Some states had age cutoffs. Others required dependents to be full-time students, unmarried and financially dependent on the policyholder. Health care reform requires dependent coverage regardless of student, marital or financial status, according to NCSL.

What's the issue?

Young Americans between ages of 19 and 29 make up about one-fourth of the 47 million Americans who are without health insurance today, the NCSL reports. The health care reform law seeks to remedy that by creating a transition period for young people who otherwise would find themselves out of the nest and uninsured.

In the past, when young adults graduated from high school or college, they often were dropped from their parents' employer-sponsored policies and no longer qualified for their state's Children's Health Insurance Program. When these young adults became ineligible for private and public health insurance, their uninsured rate climbed nearly threefold, according to The Commonwealth Fund. This left 30 percent of young adults age 19 to 29 uninsured in 2008.

Some parents' employer-based health policies covered their full-time college students, leaving part-time students and those who did not go to college without coverage. According to The Commonwealth Fund, more than one-third of 19- to 23-year-olds who were not students or who were enrolled in college part time were uninsured as of May 2010.

For those who did go to college, losing health benefits after graduation was not uncommon. The Commonwealth Fund surveyed 19- to 29-year-olds and found that 28 percent of those who had insurance while in college lost it after they graduated or left college, and 39 percent eventually switched to a new source of coverage after leaving college. Of those who lost or switched coverage, 40 percent had no insurance for at least a year, and 27 percent were uninsured for at least two years.

Getting coverage through an employer is one option after graduation -- and the goal of many recent grads. But finding a job with benefits after graduation can be difficult, and, when recent grads do find jobs, they often deal with lower wages and health insurance waiting periods before their employers' group health insurance coverage kicks in. During those waiting periods, new hire have the option of buying short-term insurance in the individual market. For those with pre-existing conditions, however, finding such coverage can be expensive or impossible.