Young adults around the country were probably pretty happy when a new law allowed them to stay on their parents' health insurance until they turned 26.
But parents with multiple children might be less thrilled about it.
Prior to September 2010, when the law that allows this (President Obama's Affordable Care Act) took effect, most policies required kids to drop off of family policies at ages 19 or 23, or when they graduated from college. Now that employers are having to cover their employees' children for longer, some of them are changing the fee structure of family plans, according to The New York Times.
Instead of allowing children to be included under a policy for a flat fee, some companies are passing this added cost onto the employees who take advantage of the new provision by charging them for each child on their plan, regardless of his or her age, usually up to a maximum of three to five children.
While the fee could be as low as a few dollars per person per paycheck, it will vary depending on the health insurance plan and employer. The bottom line is, for parents with multiple children, this so-called "per person" or "unitized" pricing could cost more than traditional single or family coverage. Under typical policies, workers can include a spouse or domestic partner and any number of children on their plan for a flat fee. The employers' argument for switching to this type of pricing structure is that it more fairly spreads costs among employees.
While it's true that this method of charging for each dependent has always been available to employers, it's gaining traction now, said Craig Rosenberg, a benefits leader at Aon Hewitt, a unit of the Aon Corporation, in The New York Times article.
According to Kathryn Bakich, SVP and National Health Compliance Practice Leader for The Segal Company, a leading employee benefits consulting firm, "Health plan sponsors can price per 'unit,' but a plan cannot increase premiums just because coverage has been added for older children. In other words, the plan can charge for each dependent, including children, but it cannot levy a special extra premium just for the adult child."
What You Should Do
If you've decided to cover your child's health insurance costs and are trying to figure out the best way to do so, follow these steps to make sure you know what you're getting into:
- Analyze exactly what your child's medical needs are. Does she need to go to a doctor frequently? Is she on a monthly medication? If so, your child will likely need an insurance policy that provides for routine access to doctors and coverage of medications. If she almost never goes to the doctor, then an individual, high-deductible plan might be a better fit.
- Find out what your company's policy is. Ask if a flat family premium is available to you, or if your pricing will be based on the number of your dependents. Also ask how soon the coverage will be made available for your child. If there's a gap between the time your kid is graduating and the time your company policy would kick in, you'll need to consider an alternative insurance in the interim.
- Compare your employer's policy with other individual policies available. You might be able to find a high-deductible, individual insurance policy for a cheaper price (try sites like eHealthInsurance or Humana).
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