Affordable Medical Insurance Options For New Grads
Each year, thousands of college graduates enter the “real world” with degrees in hand, job searches on the brain and time ticking on their medical insurance.
Medical insurance gaps put an individual’s health and finances at risk. Avoiding treatment could result in more serious health problems, and a single trip to the ER may tack a hefty sum onto student loan debt, rent and other living expenses. In addition, when a person goes 63 days or longer without creditable health insurance coverage and then finds a job with employer-sponsored benefits, the group’s insurance company can deny coverage for pre-existing conditions up to one year.
What’s a recent grad to do? Read our guide to getting coverage. As you do, keep in mind: Because everyone’s situation is unique, it’s important to consult your insurance agent and read list of things to consider as you shop around.
COBRA
Starting September 23, 2010, the Patient Protection and Affordable Care Act allows children to remain eligible for coverage under their parents’ group plans until they turn 26. When the child turns 26, they are eligible to continue through COBRA . However, premium for COBRA can be a hefty sum.
Uninsured grads and those waiting for new coverage to kick in may consider this temporary solution. While it is by no means comprehensive, short-term medical insurance (STM) offers a safety net in the event of a catastrophic illness or injury.
STM plans involve quick, easy online qualification and enrollment. Approval comes within minutes, and coverage may begin as early as the next day. To determine eligibility, applicants answer a small number of health-related questions; those with serious health conditions are unlikely to qualify.
STM premiums are usually a fraction of COBRA’s, which makes STM a good option for healthy grads who want to keep costs low. But it is important to remember that out-of-pocket expenses will be higher should they need medical care.
While STM plans are ideal for those who need fewer than six months of coverage, plans may last as few as 30 days or as many as 12 months. Once a plan expires, it is possible to apply for another policy; however, that policy is considered completely new and will not cover illnesses developed under the first one.
Limited benefit medical
Recent grads looking to fill the gap with a short term medical insurance option may also consider limited benefit medical insurance. These plans offer inexpensive, creditable, non-catastrophic coverage. Stated benefit amounts are paid for physician office visits, preventative care, diagnostic work, emergency room visits and more.
Because they are guaranteed issue, and therefore do not involve underwriting, these plans are generally attractive for those considered “uninsurable” due to pre-existing conditions, those who cannot afford major medical insurance, but need basic, affordable non-catastrophic coverage. Limited benefit medical is not suited for those who can afford and qualify for major medical insurance through COBRA or an individual plan.
If a grad lands a job without group benefits or foresees the need for long-term coverage, individual medical insurance offers the most comprehensive protection of any option and fewer out-of-pocket costs; however, premiums are typically higher and qualification is more difficult.
As always, work with an insurance agent to determine the best solution.
Additional reading:
For Some Graduates, Health Insurance is the Best Gift
LINK: http://www.campusprogress.org/cribsheets/5692/for-some-graduates-health-insurance-is-the-best-gift]
Young Adults and the Affordable Care Act
LINK: http://www.dol.gov/ebsa/faqs/faq-dependentcoverage.html]
Protecting Young Adults
LINK: http://www.dol.gov/ebsa/faqs/faq-dependentcoverage.html]
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