The most valuable college graduation gift your child receives this spring might come from a health insurer.
The health care overhaul calls on insurers to extend coverage for dependents on a parent's health insurance plan to age 26. The law says the extension is effective for the first plan year on or after Sept. 23.
Waves of insurers have recently announced extensions that start much sooner, in part to keep young adults from hitting coverage gaps that arrive when they finish school. But that doesn't mean you can automatically sign up your kid before the first strains of “Pomp and Circumstance” play.
These voluntary extensions come with a host of qualifications. Whether your child gets one also can depend on your employer.
Q: When does coverage usually end for dependents?
A: Many insurers will keep young adults on a parent's plan until they turn 19 or graduate from college.
Most states also call for coverage extensions beyond those time frames for certain types of coverage. For instance, dependents in New Jersey can remain covered under some plans up to age 31 as long as they are unmarried or have no dependents of their own. But that's an extreme. Most states allow for extensions to around age 25.
Florida law allows parental insurance coverage extensions for dependent children up to 25, as long as they live with their parent or are a student; and up to 30 years old, as long as they are also unmarried and have no dependent child of their own.
A state-by-state list is available from the National Conference of State Legislatures at http://bit.ly/9Sg5El .
Q: How much will this extension cost me, as a parent?
A: That depends on your coverage and your employer.
Insurers offer several types of coverage, including plans for single people, an adult plus a child or family coverage. With family coverage, there's usually no additional cost to add a person.
Employers pay, on average, about 73 percent of an employee's insurance premium, according to the Kaiser Family Foundation.
The new health care legislation doesn't spell out how much of the premium your employer has to pick up for an extra dependent, said Karyn Schwartz, a senior policy analyst with Kaiser.
Details of the law have yet to be written, said Steve Wojcik, vice president of public policy for the National Business Group on Health. He believes it intends for all dependents to be treated equally.
“It implies you should provide dependent (child) coverage in the same way you're currently providing it and not have two separate classes,” he said.
Q: Can my employer decline to offer this extension even if my insurer announces plans to provide it?
A: Yes. Companies that self-insure, or pay their own medical claims and have an insurer administer the policies, can wait until on or after Sept. 23 to start the coverage extensions.
Also, the law says that if your dependent has a job, and that employer offers coverage, then your insurer or employer doesn't have to cover him or her, Wojcik said.
Q: What can I do if my insurer or employer doesn't offer a coverage extension?
A: Look for short-term coverage in the individual insurance market. If a dependent has recently grown too old for a policy, he or she may be eligible to continue a parent's employer-based coverage through the federal law known as COBRA.
But COBRA premiums are pricey without an employer's help paying them, and the dependent would not be eligible for federal subsidies that help unemployed people make COBRA payments.
Still, the expense may be worth it. A gap in coverage can be financially devastating if a big claim hits.
Q: Are these extensions all basically the same?
A: No. Some have different start dates or include different groups of people.
Aetna Inc. will extend coverage starting June 1 to dependents who would otherwise become too old to remain on parental coverage. UnitedHealth starts coverage right away, but only for graduating college students.
Other insurers who have extended coverage include Humana Inc., WellPoint Inc. and several regional Blue Cross and Blue Shield plans.
Check with your insurer on the specifics of its coverage extension.