My College:
Money

Make Sure They Have Health Insurance After Graduation

Suzanne Shaffer


As your college senior looks toward graduation, they will be planning their next move: a new job, a new home or even a new city. It’s also possible your senior may not be employed after graduation. These changes all require careful consideration and can cause concerns about health insurance for your new graduate.

When my own daughter graduated from college in 2002, she was no longer allowed coverage on our family medical plan. This was prior to the passage of the Affordable Care Act and the only option available to her since she was unemployed was short-term insurance called COBRA. Knowing how important heath insurance was, she found a part-time job while searching for full-time employment to pay for COBRA.

Today, since the passage of the Affordable Care Act, young adults are more likely to be insured and are the age group that has seen the largest reduction in uninsured rates. However, many young adults consider themselves invincible and don’t think health insurance is worth spending money on. It's not as high a financial priority as other expenses like paying rent, maintaining a vehicle, and starting to pay off their student loans.

It’s important for your student to know the repercussions of not having health insurance after graduation. Emergency treatment, which can happen to anyone regardless of their health baseline, can easily result in a five- or six-figure medical bill which would cripple most young people financially. This on top of student loan payments and regular living expenses would be catastrophic for a new graduate.

Happily, your new grad doesn’t have to leave college uninsured. There are several options available and most are affordable.

Parent’s Health Insurance

Before the Affordable Care Act, health insurance plans dropped dependents as soon as they graduated from college. After the passage of this act, health plans were required to allow dependents to keep insurance until the age of 26. So, if your student is covered under your employee plan, graduation does not mean coverage ends. There are no restrictions: your dependent doesn’t have to be a student, claimed on your tax return, and can even be living on their own or married.

There might be privacy concerns since you will receive medical information and billing and it’s also possible it could be difficult if your provider network does not cover them living far away. But if you and your young adult are agreeable to continuing coverage, this could be the logical choice.

Medicaid

Medicaid enrollment is available year-round in most cases. For a new graduate with little or no income living in a state where Medicaid has been expanded to cover all adults with income up to 138 percent of the poverty level, this could be a viable option. In 2019, that was $17,236 for a single individual. Your graduate can use this helpful map to determine Medicaid coverage in their state of residence.

Employer Health Insurance

If your graduate is employed after graduation, getting health coverage through their employer is an excellent option if it is available. These employer-sponsored health plans generally offer substantial benefits with the employer paying a large amount of the premium.

If the employer has a grace period before covering the employee, your graduate would be able to use the other options available in the interim such as staying on your coverage, short-term coverage or even plans that charge a minimal monthly fee.

ACA Marketplace

For graduates who want the security of a health plan that covers essential health benefits and pre-existing conditions, the Marketplace at Healthcare.gov can be an ideal solution. Students who wish to apply for coverage outside of the enrollment period (November 1–December 15) are eligible if they have a qualifying event:

  • A new grad who moves to a new area (assuming they were already insured before the move) would be eligible to purchase an ACA-compliant plan based on the move.
  • A new grad who loses access to their coverage under the school’s student health plan would be eligible to purchase an ACA-compliant plan based on the loss of coverage (assuming the student health plan provided minimum essential coverage, which most do).

Premium subsidies and cost-sharing reductions are available through the exchange to make coverage and care more affordable. Subsidies are especially useful for people in entry-level jobs that don’t offer health benefits.

Short-Term Plans

Short-term plans are another alternative for graduates who need temporary coverage to tide them over until employer health benefits kick in or until they find permanent employment with health benefits. This was the option my daughter chose years ago, and it worked well for her.

Short-term plans can be offered with initial terms of up to 364 days and total duration, including renewals, of up to three years. However, these plans do not cover pre-existing conditions and can be declined due to medical history. They do not cover the full menu of essential health benefits covered by Marketplace plans and should be viewed as a temporary fix on the path to permanent health insurance. But for a healthy person, a short-term plan could be the best solution because they tend to be inexpensive since they don’t have to comply with the ACA benefits guidelines.

Catastrophic Health Insurance

Your college graduate could opt to choose a catastrophic health plan. These plans are a way to protect the insured against the high cost of the worst-case scenarios: a major accident or serious illness. The policy covers three primary care visits per year before you meet your deductible as well as certain preventive health services like screenings and immunizations.

Health Sharing Organizations

Health sharing organization members share in the healthcare costs of their fellow members. It is an alternative to insurance that acts much the same way that health insurance does. There are, however, guidelines members must follow typically requiring adherence with specific religious or other principals and may not be suitable for everyone.

One such organization, MediShare, has over 400,000 members who shared more than 2.6 billion in medical costs. Members are required to make a monthly payment based on age, marital status, and the number of people in their household.

Health Coverage Using Apps

Shopping for health coverage has become as easy as using an app. These may be non-traditional ways for consumers to avoid the high cost of health insurance, but many have found comfort with these online health services.

Apps like Sidecar Health, Antidote Health and K Health offer their patients the convenience of seeking medical care online, and in person if necessary, for a membership fee and a small per visit charge. This is basic healthcare and major medical expenses usually are not covered.

For the recent grad who is healthy, this type of health coverage might work well in the interim.

Choosing the Right Coverage

Your soon-to-be-graduate has some decisions to make when it comes to health insurance. These tips should help make the process easier and ensure they are covered after graduation:

  • Review all the coverage options available through a variety of sources.
  • Cheaper is not always better — look at the “maximum out-of-pocket” amount for any plan you’re considering.
  • If starting a new job, check with your employer regarding health benefit start dates.
  • Evaluate the benefits and costs of staying on your parent’s health insurance plan.
  • Look beyond the ACA Marketplace and compare other plans using private online marketplaces.

Health coverage is an essential part of independent living — make it a priority after graduation.

Suzanne Shaffer counsels students and families through her blog, Parenting for College. Her advice has been featured in print and online on Huffington Post, Yahoo Finance, U.S. News College, TeenLife, Smart College Visit, Road2College and more.
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