Health care law's rules on young adult coverage still unknown

Kaiser Health NewsApril 1, 2010 

WASHINGTON — When Allison McMaster Young heard that the new health overhaul law would allow her husband and her to keep their 21-year-old son on their family health insurance policy until he was 26, she breathed a sigh of relief.

Alex will graduate from Fordham University on May 21. Under the terms of the family plan they have through her husband's job, he'll lose his coverage the very next day because he'll no longer be a full-time student. Keeping Alex on the family policy would be by far the simplest and most affordable way to keep him covered after he graduates.

Then Young went online, however, and read the legislative language. The provision, she learned, won't become effective until Sept. 23, six months after it was enacted. Her family faces a four-month gap during which they'll have to cover Alex's medical bills or find an alternative insurance option.

"I thought, this is a big problem, both for us and for all those people who think their kids are going to be eligible when they graduate in May," said Young, whose family lives in Manassas, Va.

The president and legislative leaders have showcased the young adult coverage provision, along with a few other consumer-friendly changes, as an example of the immediate benefits of the health overhaul. Instead of giving the new law a public relations boost, however, it's creating consternation among some parents, who are sharing their concerns online about when the provision kicks in and whether their families will qualify.

Until the Department of Health and Human Services issues regulations for the new law, many details about how it will work remain uncertain. For example, it's not clear how "dependents" will be defined.

A companion measure removed a restriction in the main legislation on extending coverage if the child was married, said Sara Collins, a vice president of the Commonwealth Fund, a nonprofit health policy-research organization. Likewise, employed children may be covered under the new provision as long as they don't have access to health insurance through their jobs, according to an HHS spokesman. Complete guidance must await the regulations, however, and no date has been set for their release.

Young adults make up one of the biggest groups of the uninsured. Forty-five percent of those ages 19 to 29 were uninsured for at least part of last year, according to a Commonwealth Fund survey last summer of 2,002 young adults. This figure is significantly higher than the 30 percent rate that the Kaiser Family Foundation's Commission on Medicaid and the Uninsured reported for 2008, and it may be a result of the economic downturn. (Kaiser Health News is part of the foundation.)

Since many health plans require adult children to be full-time students in order to stay on their parents' plans, young adults are at particularly high risk for losing coverage when they leave high school or college.

The Commonwealth Fund survey found that although more than three-quarters of college students had health insurance while they were in school, 28 percent lost their coverage when they graduated or left school. Nearly half of those who were able to get new insurance experienced a gap in coverage; in many cases they were uninsured for a year or more.

About half the states have passed laws that extend the ages that children can remain on their parents' policies into their mid-20s or later. To qualify, however, children may have to be full-time students, live at home or be financially dependent, among other restrictions.

David Campo of Princeton, N.J., ran into a different problem.

Even though New Jersey allows children to remain on their parents' policies until age 30 with few restrictions, the engineering firm where Campo works doesn't have to abide by the law. That's because his company self-insures, meaning that it pays for its own health benefits rather than buying a state-regulated insurance policy.

Campo's 22-year-old daughter, Katie, who graduates from Rutgers University in May, has Crohn's disease. She receives drug infusion therapy with Remicade every three months, which keeps her disease in check. Each treatment costs more than $7,000, Campo said, so ensuring that Katie has good health insurance is crucial. For now, she's on her father's plan.

The new law will make it much easier for parents to keep their children on the family plan. It applies to all health plans, whether they're fully insured or self-funded. In addition, the provision allows self-employed families with coverage on the individual market to keep their children on the family policy until age 26 and continue to deduct the family premiums from their taxes, said Edwin Park, a senior fellow at the Center on Budget and Policy Priorities, a research center in Washington.

Policy experts have identified a few areas of concern, however. One is whether children who are added to the family plan may be subject to a risk assessment by the insurer, and thus higher premiums.

"The regulations must state strongly that not only do you have to put (adult children) on the policy, but you can't jack up the rates," said Sabrina Corlette, the director of health policy programs for the National Partnership for Women and Families.

Another potential trouble spot for parents who are impatiently counting the days until the new law takes effect: They may have to wait longer than they think. That's because plans might not implement the changes until a new insurance-plan year begins after the Sept. 23 effective date, said Dawn Horner, the senior program director for Georgetown University's Center for Children and Families.

"It takes time to get these things up and running," she said.

"It was extremely important to lawmakers to get young adults covered under their parents' insurance plans as soon as possible, and this policy is designed to accomplish that goal within the quickest possible time frame," said one Democratic Senate aide, who asked not to be identified because he wasn't authorized to speak publicly.

In the meantime, parents have some options. The Young and Campo families plan to extend their children's coverage through their current policies under the federal law known as COBRA. COBRA permits a child to remain on the family plan for up to 36 months if he or she no longer qualifies as a dependent under the health plan's rules, including no longer meeting age restrictions.

There's a catch, however: Parents are on the hook for the entire premium plus a 2 percent administrative fee. In the case of the Young family, this will add another $500 a month to the family's $700 premium. David Campo said his company hadn't yet informed him what it would cost to cover his daughter under COBRA.

Another possibility is to purchase a plan on the individual insurance market. If a child has no health problems, that may be an affordable option. Individual insurers can and do reject applicants for minor medical problems, however; a bad knee, for example, or a skin condition such as eczema, experts said.

Young investigated individual policies for her son, whose post-graduation plans to turn a Web site he started in college into a profitable business certainly won't provide health benefits. However, insurance brokers told her that because of minor pre-existing conditions no insurer would cover him.

Meanwhile, Young is trying to raise awareness about the issue. She created a Facebook page where she encourages its more than 120 members to contact their representatives in Congress to urge them to move up the effective date.

Her next step: adding her two cents to the public comment section once HHS posts draft regulations for the law. At this point she's not confident that her efforts will bear fruit, however.

"We're getting closer and closer to September," she said. "I'm not sure what will happen."

(Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy-research organization that isn't affiliated with Kaiser Permanente.)

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