Health-Insurance Tips for the Graduate
Employers expect to hire 22% fewer new college graduates from the class of 2009 than from the class of 2008, according to the National Association of Colleges and Employers. That has prompted eHealthInsurance-an online service to compare, price and buy health insurance-to offer eight tips for college graduates who have yet to secure full-time employment and are in need of affordable health insurance.
While students under age 25 are often covered through parents' or university health-insurance plans, many carriers won't allow dependent children over 18 to stay on parents' plans after they graduate. In 2007, the Census Bureau estimated that nearly eight million young adults (ages 18-24) were uninsured, making them the largest segment of the uninsured population. That problem is likely to be compounded with the rise in unemployment and lack of new jobs resulting from the current economic recession.
New college graduates are encouraged by eHealthInsurance to:
1. Get the lowdown on their hometown. Residents of Massachusetts, New York, New Jersey, Maine and Vermont--which are "Guaranteed Issue" states--can't be denied medical coverage for pre-existing health conditions. Such graduates should go online, search for the best plan they can find and buy. Graduates who don't live in a "Guaranteed Issue" state need to be aware of how any pre-existing health conditions could affect their ability to qualify for coverage. Health insurance is regulated and sold by state, so collegians moving to a different state after graduating will need to buy health insurance in that new state.
2. Learn the lingo. Graduates who are relatively healthy may be able to find more-affordable plans in the individual health-insurance market that provide coverage comparable to what they got through their parents or at their University. But they need to get educated (no tests this time) before they start to shop around. Take the time to understand the terminology in the individual health-insurance market. Terms to understand when going shopping for a plan include co-payments, co-insurance, out-of-pocket limit and lifetime maximum. (Graduates can find definitions of these and other terms at eHealthInsurance.com.)
3. Talk with an agent. If someone has a pre-existing health condition, it's a good idea to talk with a licensed agent in the person's state who can help figure out whether the pre-existing problem would exclude qualifying for an individual policy in the state. It's also a good idea to talk with a doctor about any pre-existing condition. Try to get a sense of how much care could be required and how much coverage might be needed.
4. Shop 'til you drop. One of the best places to search for policies is with an online broker. [Full disclosure: This advice is, of course, from a company that sells insurance online.] By going to the Web, graduates are likely to find the largest number of available plans. By law, every broker must sell policies at the same price, so clients can't find a better deal just by switching brokers.
5. Maintain independence. If a graduate is thinking he or she might change jobs frequently, or be more likely to freelance and work independently, it might make sense to get an individual health-insurance plan that would stay with the person regardless of where his or her career leads. Then, if a prospective employer offers health-insurance benefits, the person could decline coverage and negotiate a higher salary. According to J.D. Power and Associates' 2009 National Health Insurance Plan Study(SM), people with private health insurance were more satisfied with their plans than those with insurance from a small employer (50 or fewer employees). Before switching, ask prospective co-workers whether they like the group plan. If it isn't better, and it isn't cheaper, why change?
6. One can never be too safe. Be careful to protect private information. Some online brokers simply aggregate leads and send them to live brokers who may call people directly. To avoid excessive telemarketing calls, control the process by using an online broker that doesn't sell private information to other brokers and lets clients search for quotes anonymously.
7. Practice safe selection of policies. It is particularly important for single women to know that private health-insurance plans don't automatically cover maternity benefits. That can be great news if people are looking to save money, and they don't want to (or plan to) have children while they're on this plan. But if a woman is planning to get pregnant, or thinks there's a chance she could get pregnant, she should be sure to buy a plan that covers maternity care. If she can't find a plan with maternity coverage, she may need to explore purchasing a maternity rider, which is a supplement to an existing health-insurance policy that covers maternity benefits.
8. Not ready for a long-term commitment? Consider a short-term plan. If graduates know they'll have a job within a few months after graduation, short-term health-insurance plans may be a good option. Short-term plans typically last for six months and have less-stringent qualifications. Such a plan can avert a health-insurance gap before the start of a new job. This isn't a good long-term solution; short-term plans are more limited in benefits and often can be renewed only once.