My daughter is about to graduate from college, and I know
that the new health care law lets me keep her on my health
insurance policy. Is that the best way for her to have health
insurance? If so, will I need to pay extra or take any special
steps to make sure she stays on my policy after she
10 Smart Gifts for College Grads
Adult children can now stay on their parents' health insurance
policies until age 26, even if they've graduated from college.
Keeping your daughter on your policy can be an easy way to continue
coverage if she doesn't have a job with health benefits. You
usually don't need to take any special steps at graduation -- most
insurers automatically continue coverage for dependents for the
rest of the plan year -- but you may need to check a box on your
enrollment forms or sign up for dependent coverage again when you
choose next year's coverage during open enrollment.
Keeping your daughter on your policy may not always be the best
solution, however. Before you do so, do your homework to see
whether she can get a better deal on her own.
Find out about extra costs.
Insurers can't charge higher premiums on family plans specifically
for college graduates, but they can charge extra for dependents of
any age. If you have other children covered under the policy and
the insurer charges one family rate regardless of the number of
kids included -- which is typical -- then you may not have to pay
extra to keep your daughter on your policy. But if your daughter is
the only child covered and you would otherwise drop from family
coverage to single or couples coverage, or if the plan charges
extra for each dependent, then you might end up paying more to keep
her on your policy than for her own coverage. In most states,
healthy people in their early twenties can buy a health insurance
policy on their own for $100 to $200 per month. You can get price
quotes for individual policies at
or find out about policies available by zip code at
Ask about your plan's out-of-area coverage.
keep your daughter on your policy, she may not have access to
in-network providers if she moves to a different state. "Insurers
typically don't negotiate rates or relationships with medical
providers outside of their local area," says Carrie McLean,
consumer expert with eHealthInsurance.com. If you have coverage
through a regional HMO with a small network of doctors and
hospitals, her coverage may be limited to emergency services in her
new state. Even with a preferred-provider plan, which allows for
out-of-network care, the network might not extend to her new area,
and she would likely have to pay much larger co-payments for
out-of-network care than for in-network. Insurers with national
plans, such as Cigna, typically have plenty of doctors and
hospitals in-network around the country. "The best course of action
is for the dependent to request a summary of benefits for the new
location," says Kelly Brooke, of Cigna.
Learn how the rules work if your child gets a job with
If your daughter does get a job with health benefits, signing up
for coverage through her new employer may be her best bet,
especially if her employer subsidizes a big chunk of the cost
(employers typically pay 60% to 75% of the premiums for their
employees). But if your daughter's new plan has mediocre coverage
and a high price tag, she may want to stay on your policy. That may
or may not be an option, however, depending on whether your plan is
considered to be
-- the technical term for health insurance plans that haven't
changed significantly since the health care reform law was passed.
(Ask your benefits administrator or insurer about the status of
your plan.) If your plan is not grandfathered, your daughter can
stay on your policy even if her new employer offers health
insurance. But until 2014, grandfathered plans are not obligated to
offer coverage to a dependent up to age 26 if the young adult is
eligible for an employer-sponsored plan outside of the parents'
plan, says Brooke. Ask your employer about the eligibility
Consider a high-deductible individual policy.
Young, healthy people may be able to find low-cost health coverage
in most states by buying a policy with a high deductible -- at
least $1,200. Such policies provide coverage for major emergencies
and illnesses but leave the policyholder to cover smaller expenses
(most plans must now provide some preventive-care benefits,
including annual check-ups and certain tests, without charging a
co-payment or imposing the deductible). If the policy has a
deductible of at least $1,200 for individual coverage, your
daughter can also make tax-deductible contributions (of up to
$3,050 in 2012) to a health savings account, which grows
tax-deferred and can be used tax-free for medical expenses in any
year. You can give her some money to help build up her HSA balance,
which can help cover the deductible, co-payments or other
out-of-pocket costs for her medical expenses.