Short-term health policy may be answer for jobless 20-somethings

Posted Thursday, Aug. 06, 2009
 

If you are a recent high school or college graduate and still haven't found a permanent job in this tough economic market, health insurance may be the last thing on your mind.

Fortunately, if you're under 25 and a dependent of your parents, it's possible that you can remain on their healthcare policy. This applies whether you are still in school full time or not, said John Greeley, spokesman for the Texas Insurance Department.

The Legislature passed that law in 2003. However, there is a big exception: Companies that self-insure are exempt, and many large employers fall in that category. Parents, ask your employer's personnel department about it.

After age 25, you're on your own. Increasingly, this age group is looking at temporary or short-term policies to fill the gap while they wait out the job hunt. These policies are also popular among those who get a job but face months of waiting for eligibility to kick in and those who have lost their job and need coverage while looking for a new one.

The Class of 2009 has fared poorly in the job market, and many recent grads remain uninsured.

According to a survey by the National Association of Colleges and Employers, 19.7 percent of 2009 graduates who had applied for a job actually had one when they graduated in May or June. In comparison, 51 percent of those graduating in 2007 and 26 percent of those graduating in 2008 who had applied had a job by the time of graduation.

A study by the Commonwealth Fund found that nearly 2 of 5 high school graduates who do not enroll in college are uninsured for a time. Likewise, about one-third of college graduates do not get health insurance for a period after graduation.

Tough economic conditions are, in part, why Blue Cross and Blue Shield of Texas saw a record increase in short-term plans in the first six months of this year, said Margaret Jarvis, spokeswoman for the Richardson-based insurer.

Through June, "we've seen a 33 percent increase in short-term-plan applications," she said. The insurer also saw a similar increase in applications for permanent individual plans, she added. Individual plans are designed for people who do not get employer-provided insurance.

Jarvis said that basic coverage with a $1,000 deductible would cost a 25-year-old male about $60 a month and a 25-year-old female about $72 a month.

United HealthCare's Golden Rule Insurance, which recently added two more short-term plans in Texas, has also seen an increase in demand, spokeswoman Ellen Laden said.

"The market needs are quite different than what we've seen in the past," Laden said. The insurer's new plans have higher deductibles with lower monthly premiums, last 12 months and are renewable, and can be dropped by the policyholder at any time without penalty and with a return of any premium paid.

According to a United HealthCare study, two-thirds of young people said they did not know how to shop for health insurance but understood the need for it.
Signing up for a short-term plan can be a quick, relatively painless process, Laden said. Golden Rule's plan has just six questions, only two dealing with health issues. No physical or blood test is required, and just a few serious medical conditions disqualify an applicant, she said.

"They're not medically underwritten in the traditional sense," she said.

Short-term plans can be bought online with an answer given within 24 hours.

Costs are fairly low. For a 25-year-old healthy male with a $1,000 deductible, premiums range from $52 to $65 a month on Golden Rule's short-term plan.

"For the cost of a large pizza a week and the time to have it delivered, most people can have health insurance," Laden said.

Although most young people are healthy, health insurance is still important to protect against accidents and other situations that could leave one in deep medical debt. In the Commonwealth study, 37 percent of young adults were carrying medical debt.

Short-term policies have limitations that should be considered before signing up, however. "We have some concerns with these plans," said Greeley, of the Insurance Department.

Foremost among them: If while under a short-term plan you develop a medical condition, you could be turned down when the policy comes up for renewal, Greeley said.

Ultimately, short-term plans are designed for healthy applicants.

"When an immediate need for coverage exists and if a client has no major health conditions, the short-term [plan] is a quick fix, albeit a temporary one," said Jeff Schaffer, an independent insurance agent in downtown Fort Worth.

Short-term plans do not cover pregnancy. And because of high deductibles, often the cost of doctor visits and prescriptions falls on the policyholder.

"Short-term plans are designed as catastrophic coverage," Schaffer said. "They don't often have co-pays for doctor visits or brand-name prescriptions. So with most plans, everything is subject to the deductible and co-insurance percentage. That helps to keep the premium cost down."

Online: Go to www.tdi.state.tx.us and search for "short-term policies."

Teresa McUsic's column appears Fridays.