For Some Graduates, Health Insurance Is the Best Gift
Many recent college grads are facing the problem of finding medical insurance for the first time in their lives, but they should remember that they have options.
It’s the week before graduation, and life is a blur. The days are full of friends, fun and nostalgia for the past four years. Despite the bittersweet nature of the event, there’s generally reason to be happy. And then an ominous letter comes in the mail. “Attention student:" the letter reads. "Your health insurance may end soon.” It’s an easy threat to ignore. Most college students likely haven’t had to think about their health insurance to this point, having remained on their parents’ plan through school or signing on with their university’s option. But with the recent developments surrounding young adults and health insurance accompanying health care reform legislation, recent grads would be wise to take a crash course in how to keep themselves covered.
Affordable Care Act
Amid threats of losing insurance, there is some good news on the horizon: One of the most talked about and exciting provisions of the health care reform law, known as the Affordable Care Act, is that college students will be allowed to remain on their parents’ health insurance plans until they turn 26. This provision is new; previously, students usually lost insurance coverage after leaving college. In practice that means that college students facing a variety of circumstances—graduating without a job, graduating with a job that doesn’t start for several months, or graduating with a job that offers no health benefits—don’t have to worry about being uninsured come graduation day.
As great as this provision of the health care reform law is, it has one major drawback: It doesn’t go into effect until Sept. 23 of this year. More than 65 insurance companies have agreed to offer the benefits immediately, but according to a Mercer studyof about 800 employers, three-quarters said they would not offer these extended benefits until January, when many of them renew their coverage agreements.
Going without insurance is risky
While many recent grads might be frustrated, uninsured, and—frankly—kind of confused, one advocacy organization is working to clear things up.
Young Invincibles (YI), an advocacy group of young people who became frustrated with media reports that claimed "young invincibles" didn’t care if they were insured, named themselves after the phrase and began making sure young people were represented in the health care reform debate. [Disclosure: Campus Progress worked with Young Invincibles to advocate on behalf of young people during the health care reform debate.] The YI website has an iconic fist raised in victory, wrist banded with a hospital admission bracelet. “Because no one is invincible without health care,” reads the banner across the top.
YI gathered some startling price information about expected and unexpected health care young people might have to get. Wisdom tooth extraction: $410. Fractured rib: $12,000. Hospitalization for diabetes: $24,843. Torn ACL: $9,220. Hospitalization for asthma: $12,496. Pre-natal care and hospital birth: $9,562. Appendicitis: $21,066.
Aaron Smith, the co-founder and executive director of YI, wants to do something to keep young people from being caught off guard. Smith is 28—putting him outside the range affected by the new up-to-26 regulations—and has just graduated from Georgetown Law School. “Recent grads are among the highest rate of the uninsured of any population,” he says.
But though the thought of looking for insurance might seem overwhelming to a recent grad, Smith outlines some concrete options. “Some college plans, for example, will continue through August so you’ll have a few months after school ends.” But not all plans offer this extra protection. “You can get COBRA, which is an extension of your insurance for up to six months, but that’s often quite expensive,” Smith says.
For the more frugal, and those who understand more about the particular health care options they might need, there is also an individual market. You can visit websites like einsurance.com and try to find a plan that works for you.
But online policies, or any policies that may not offer you the fullest extent of coverage available, carry risks. Smith cautions against the notion expressed in his organization’s name: Young people are not invincible.
“You might feel healthy and you may be healthy, but there’s always the risk that something can happen to you,” he says. “It can be an accident. You could get sick. You could need a prescription. You could have to go to the emergency room for some reason. You need to have insurance that is comprehensive enough to cover you in that situation.”
What are the options?
Some non-profits exist to provide minimal short-term health insurance plans to young graduates who are experiencing a coverage gap. A recent grad that is stuck without insurance until Sept. 23, or someone whose job has a benefits lag or no benefits at all, might go to a place like Meyer and Associates.
One of the few alumni program insurance administrators in the country, Meyer and Associates partners with universities to make graduates aware that, most likely, they’re about to lose their coverage. From there, they offer several short-term medical insurance plans.
Short-term medical insurance, says Meyer and Associates vice president Ann Abdi, “is really intended for people who have a permanent option on the horizon.” People who choose an STM plan know they’re going back to grad school, or they have a job, know when they’re starting it, and know that when they begin that job, they’ll have benefits available. STM purchasers should also be healthy—a requirement that is generally not a problem for young graduates—since these plans often have exclusions for people with pre-existing conditions. For that reason, STM plans also aren’t available in every state. California, Massachusetts, New Jersey, and Vermont, for instance, have laws against such exclusions.
But for many who don’t have the option to hop back on their parents’ plan, these options are viable. “If you know you’re going to grad school or that you’re starting a job the week after Labor Day, and you don’t have a chronic health condition and you just want to make sure that—God forbid—if you’re hit by a bus that you have coverage, STM is perfect,” Abdi says.
These types of plans are usually less expensive than COBRA—the actual price is dependent on one’s zip code—but even COBRA’s high deductibles can be better than no coverage at all.
“If you know you’re going to have health care needs and it’s extremely important you stay insured, that money can be worth it,” Smith explains. “Folks with chronic illness or even diabetes can have bills in the thousands every year… Generally it’s worth it to stay covered.”
Abdi offers an example: “Even if you buy a $5,000 deductible—the first $5,000 of an expense would be on you—the reality is that while it might be a lot to imagine paying out of pocket, it’s not going to cause your family to have to mortgage their house. It might be painful to pay it back for a little while, but it won’t cause financial chaos in your family.”
Lobbying for health insurance
For students whose parents’ employers or health insurance companies have decided not to enact the new benefit laws early, there is still hope. Smith emphasizes the power employees have to act as lobbyists within their own companies.
“If enough employees ask their company and say this is an important benefit for us, they can put a lot of pressure on companies to start this dependent coverage sooner,” he says.
That’s exactly what happened at Dickinson College in Carlisle, Pennsylvania. When political science professor David Strand heard about the dependent coverage provisions in the new law, he emailed the college’s human resources department to see if they’d be enacting the rules sooner.
At first, the response Strand got was ambiguous. “Not a yes and not a no,” he says, but they said they were looking into the issue and seemed receptive. So Strand organized his fellow faculty and staff with graduating children and urged them to present their concerns to the college’s administration. Very quickly, it worked. Dickinson changed its policy to cover dependents immediately rather than waiting until September.
To Strand, it’s not just an issue of economics, but one of ethics. “Colleges have a responsibility to align themselves with progressive policies, and I think that’s what this is,” he says.
Dickinson president William Durden offers a similar reasoning for his decision. “It is the right thing to do and we could do it,” he says. “In this period of extreme financial pressure upon institutions, it is important to maintain good staff and try to do as much as we can for them within our means.”
Perhaps Strand’s experience is uniquely positive — and the employer figures from Mercer suggest that it might be — but recent graduates still have reason to be hopeful. With all of these available options and the patience to figure it all out, it is possible to follow Abdi’s advice: “Don’t go one day without coverage.”
After all, we aren’t invincible.
Paul Richards is a staff writer for Campus Progress. He attends the University of Pennsylvania.