Insuring Your Adult Child

Should they stay on your health care plan, or could they save with a separate policy?

With changes in medical insurance laws allowing children to stay on their parents’ medical plans until age 26, keeping your child covered under your plan may seem like a no-brainer. After all, companies can’t charge you extra just because your child is now a college graduate—and what young adult couldn’t use a helping hand in the form of good, reliable coverage? As of January 1, 2011, the Affordable Care Act ensures that even kids previously dropped from insurance when they turned 22 can be reinstated.*

Yet while keeping grown kids on the health plan may work for many families, it’s not automatically the cheapest or easiest solution. Even if you do decide to continue insuring your adult child, be sure to consider all of the costs and options first.

What’s the total cost? While it’s true that insurance companies can’t charge more specifically because your child turned 22, they still may charge more for having dependents on the plan. Say, for example, that your son is an only child. By switching from a family plan to one that just covers you (or you and your spouse), you may find that your premiums drop dramatically. Assuming your son is in good health, at his age, he maybe able to find coverage significantly cheaper than the cost of maintaining your family plan—making the total cost of family care cheaper than under a single-family plan.

To further reduce the cost of care, you may want to consider an individual plan with a high deductible for your grown child. This plan could leave your child covered for unforeseen major expenses, while he or she would be responsible for routine costs of care that, for a young, healthy person, may be minimal. To help cover those routine costs, you could set up a Health Savings Account, which allows money to grow tax-deferred until it’s used for medical expenses.

Will your child stay in the network?
Especially in these tough economic times, young job seekers must go where the work is. If your daughter accepts a position in a different state, will she still be able to see caregivers within your network? While some insurers maintain wide networks of doctors and hospitals around the United States, be sure to check the terms of the policy, and what additional costs you’ll be responsible for if she must go out of network.

What about my child’s coverage at work?
The decision to stay with your plan or jump to a new employer’s depends on the specifics of your child’s situation and the quality of care offered at the new job. If the employer’s plan comes with high fees and limited coverage, it could make sense for them to stay with your plan. Keep in mind, though, that if the employer’s plan hasn’t changed significantly since the Affordable Care Act was passed, that plan may be considered “grandfathered.” This means that since your child now has access to an established plan through work, he or she may not be eligible to stay on yours.

*http://hr.commerce.gov/s/groups/public/@doc/@cfoasa/@ohrm/documents/content/prod01_009468.pdf.

Under the Nationwide Family Plan, anyone who lives under your roof can receive the same discounts and benefits you’re entitled to.