Good News at a Low Price: Coverage for (Some) Young Adults

Federal health care reform mandates that employer-funded and insured health plans must allow adult children to stay on their parents’ health insurance policies until age 26.   This is especially important in the current economic environment, where jobs with benefits don’t abound.   The requirement applies to employers with self-insured health plans, which is unusual. Under ERISA (Employee Retirement and Income Security Act), employer self-funded health plans are exempt from most state regulations.  While the federal government can regulate these self insured health plans, it has not done so extensively.  

The Los Angeles Times reports today that United Health, Wellpoint, and Humana have announced that they will honor this requirement immediately, rather than waiting for the September 23 implementation date.  This is a sea change.  The Washington Post reported just this past fall that 60% (!) of employers including some states were using dependent eligibility audits to push young (ineligible) adults off their parents’ policies. 

This is not as big a deal as it looks for two reasons
1)       United’s press release  makes it clear that this applies only to fully insured health insurance plans (a minority of UHC’s business) and only to graduating college students. So – it really only applies to a minority of the college class of 2010. 
2)       The cost of providing insurance for adults between 18-26 is quite low.  Actuarially, this group needs little care that is expensive.  There are a small number of pregnancies, trauma cases, and malignancies that can be devastatingly expensive, but most young adults have very low medical expenses.  Therefore, this is a perfect group for insurance coverage!   

This is good news at a low price for a small group of young adults.