A: Health care coverage for college graduates is one of the features of the health care reform bill, which will mandate that insurance companies keep covering adult children until they reach age 26. Unfortunately, this provision doesn't go into effect until September 2010. That leaves quite a gap!
Fortunately, some major insurers have recognized this problem and decided to start the extended coverage immediately, so this spring's graduates won't have to face that problem. Contact your insurance plan to see if they have decided to offer this coverage immediately.
If your plan does not offer coverage until this fall, you are wise to consider the possibilities. Most college students feel that they are in good health and can do without insurance. The fact is that, statistically, they do have a lower probability of a health emergency. But other statistics show they are more likely to be in an auto accident, or to participate in risky sports or other activities!
Since you would be responsible for the costs of any medical emergency or hospitalization, you should start looking for alternatives right now. The best place to search is online at eHealthInsurance.com. They compare policies based on coverages, costs and deductibles, and allow you to choose the most appropriate plan.
Since health insurance policies vary by state, you'll start by filling in your state of residence and your daughter's age. Then look for "Short Term Plans" in the box marked "type of insurance." These are plans specifically designed for those who are between jobs or have just graduated.
I checked on costs for a 21-year-old woman in Chicago. I searched for a plan that would last six months. (The maximum duration coverage for a short-term policy is 360 days.) The price depends on the features, of course. And you can get a discount if you pay for the entire policy upfront.
Choosing a higher deductible can lower the cost dramatically, as can increasing the co-payment. For example, one policy with a $5,000 deductible and 50 percent co-pay costs only $32.31 a month. But that's hardly any coverage at all, and will leave Mom and Dad quite exposed in case of a serious health problem.
The same company offers a more attractive plan with a $2,500 deductible, and a 20 percent co-payment for $50.49 per month. And if you want a lower deductible of only $500, with a 20 percent co-payment, the monthly payment doubles to about $102 per month.
Comparing policy features is easy, as the online program allows you to choose several and compare coverage and costs. And there's toll-free help to answer any questions, as well as to help you apply.
When you consider the potential costs of an uninsured accident or illness, these policies really don't seem very expensive. The big drawback is that they are only for the short term, and you might worry about whether she will qualify for renewing coverage if she doesn't find a job with health care benefits.
The new health care reform has you covered on that issue, as well. If your daughter is in good health, she should have no problem getting a new short-term plan. And if for some unforeseeable reason she might not qualify for a new plan because of a health condition, she'll be eligible then for the new state-run plans that do not disqualify applicants because of pre-existing conditions.
So thanks for bringing this up. The new health care exchanges won't go into action for nearly four years. But eHealthInsurance.com is the model for what is to come — and it's here right now. No matter whether you're a recent grad or employed by a company that doesn't offer health care, it's worth checking to find something affordable so that uncovered medical costs don't destroy your finances.
Terry Savage is a registered investment adviser and is on the board of the Chicago Mercantile Exchange. She appears weekly on WMAQ-Channel 5's 4:30 p.m. newscast, and can be reached at www.terrysavage.com. She is the author of the new book, "The New Savage Number: How Much Money Do You Really Need to Retire?"