Monday, June 13, 2005

Congratulations, Class of 2005! Now about that insurance…

As the father of a recent high school graduate (with Honors, no less!), I can begin to look forward to the next phase: college. For those that have a recent college grad, however, there’s an additional consideration:
Most group insurance plans cover your post-teen progeny only until they graduate. That is, if they’re not full-time students, they’re not covered. This is of no small concern, because there are a few options available, and it’s important to pick the right one.
Your first stop is your group insurance certificate of coverage (which is actually a booklet). It will outline when your grad’s insurance stops – sometimes it’s the end of the month following graduation, sometimes it’s that very day. At that point, there are really three basic choices, and which one you choose depends a lot on your grad’s post-grad plans:
If he’s headed to grad school, you may be able to keep him on your plan. Check your certificate, or call your HR department. If he must drop off, and he’s in good health, and you KNOW he’s starting back to school in the fall, then a Short Term Medical (STM) plan may be appropriate. The advantage of these plans is that they are inexpensive, easy to buy, and you pay only for the time you (think) you’ll need the coverage. Check with the grad-school to see what options are available once school starts.
Likewise, if your grad is headed into the “real world,” and has a job already lined up (WooHoo!), be aware that there is usually a waiting period between when the job starts and when the coverage begins. The STM is appropriate in this case.
If your grad is unsure about future plans, a better idea would be to purchase an individual major medical plan, preferably one with a $1500 or higher deductible. These plans are underwritten, and generally cover (disclosed) pre-existing conditions. And there’s no “expiration date,” so they’re more flexible if there’s a continuing need. They are typically more expensive than STM plans, but are the better choice for needs longer than, say, 3 months or so.
If your grad has a serious health condition, and doesn’t qualify for the major med plan, then check to see if your company is subject to COBRA. If there is a serious condition, you really don’t want to go the STM route, for a variety of reasons.
If your company is subject to COBRA, by all means elect it for your grad. Yes, it can be expensive, but it will cover the pre-existing condition(s), and offer more long-term options.
This is by no means an exhaustive list of options. For more detailed information, especially if you have unusual needs or circumstances, your best bet is to consult with a professional, independent agent, with 5 or more years experience in the health insurance field (oh, like me). Meantime…
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