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Young adult insurance hike

Those who stay on their parents' plans until age 26 will raise premiums about 1 percent.

    by By Ricardo Alonso-Zaldivar, Associated Press, Inquirer
    Published 

WASHINGTON - Letting young adults stay on their parents' health insurance until age 26 will nudge premiums nearly 1 percent higher for employer plans, the government said in an estimate released Monday.

The coverage requirement, effective starting later this year, is one of the most anticipated early benefits of this year's health insurance reform bill. Currently, many health plans drop offspring at age 19 unless they are students.

Many insurers already have started offering extended coverage to families that purchase their coverage directly. And employers say parents have flooded their benefits departments with questions.

The Health and Human Services Department on Monday released estimates of the costs and benefits of the requirement as part of a regulation directing employers and insurers how to carry it out.

The new benefit will cost $3,380 for each dependent, raising premiums by 0.7 percent in 2011 for employer plans, according to the department's mid-range estimate. About 1.2 million young adults are expected to sign up, more than half of whom would have been uninsured.

An extended coverage option will be required starting this fall, for health plan years beginning on or after Sept. 23.

Family coverage through the workplace now averages about $13,400 a year - counting both the portions paid by the employer and worker. Many employers allow workers to keep college students on the company health plan until they graduate. But under the new law, staying in school would no longer be required.

The regulation also specifies that young adults offered extended coverage through an employer cannot be charged more than other dependents, nor can they be offered a lesser set of benefits. Instead, the cost must be spread broadly.

The situation is different for people buying their family coverage directly from an insurer, as many self-employed parents do. Unlike employers, insurers in the individual market do not have to spread the costs broadly. Parents would face an estimated additional premium of $2,360 in 2011.

Enrollment as well as cost would increase modestly after 2011 for both employer and individual plans.