After pomp and circumstance, quest for coverage begins

Young adults make up a significant segment of the uninsured population. Some of these folks lose coverage when they graduate from college because they no longer have dependent status pursuant to their parents’ health insurance coverage or their college health plan coverage ends. There’s also been a persistent belief that some young adults choose not to have coverage because they feel they are invincible and don’t need it. But at least one recent survey belies this belief.

In an online poll of 1,000 18-21 year olds conducted by the polling company™ inc. for UnitedHealthcare, 82 percent of young adults see health insurance as a necessity they cannot ignore. Yet more than half acknowledge that they lack information to make good decisions about coverage once they are no longer on their parents' or college plans.

The survey also found that 67 percent of young adults have not made any plans for health insurance coverage after they leave school, even though the overwhelming majority acknowledges the importance of coverage. In fact, 68 percent rank health benefits as important as salaries when choosing their jobs.

Graduates: welcome to the insurance world. This survey raises several issues. First, it’s good news that young adults (at least the ones in this survey) are recognizing the importance of health insurance. A night or two in the hospital or surgery for a broken limb could result in medical bills that haunt for years or lead to bankruptcy.

Second, the survey reminds us about some of the problems with employment-based insurance. In this economy, a lot of fresh college grads are going to have trouble getting jobs and, thus, getting health insurance. Even the grads who obtain jobs may find there is a significant waiting period before coverage begins. To bridge the gap, COBRA might be available based on previous coverage under a parent’s plan. But the premium subsidy generally won’t apply to these individuals, so the premiums are likely to be quite high.

Another problem related to employment-based coverage is dependent eligibility. As mentioned above, young adults who are covered under a parent’s plan often lose such coverage around age 25 (or age 18 if not a full-time student). Several states have addressed this issue by extending the dependent age limit for group plans (the most recent being Pennsylvania, which is set to extend the age limit to 30 for certain dependents). But that leaves out plans in states that have not extended the age limit and also parents’ coverage under self-insured plans, which are not subject to state rules.

The survey also raises the issue of obtaining individual coverage. As we know, there are obstacles to obtaining such a policy – cost, pre-existing condition exclusions, and gender rating, just to name a few.

Finally, the survey’s results on the lack of information highlight the importance of educating young (actually, all) adults about health care coverage options. If (when?) health care reform is passed, it will be more important than ever for us to be informed so that we can make good decisions about coverage. For that information, stay right here. We’ve got you covered.