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Now Graduates Can Keep the Coverage as Well as the Gown

One of the first pieces of the new health reform law to take effect will start helping young adults this fall, and it could significantly improve coverage among a group that makes up a disproportionate share of the nation’s uninsured.

As explained in this fact sheet, many insurance companies and employers don’t cover individuals on their parent’s health plan once they turn 19 or fail to meet other criteria, such as being a full-time student or living with the parent.

But under the health reform law, insurers and employers that offer dependent coverage will have to allow parents to include children up to age 26.  For parents with an employer-sponsored plan, young adults are eligible for coverage only if they don’t have access to job-based coverage on their own.

The law requires insurers to make this change for their new plan year that begins on or after September 23.  Many health insurers say they’ll implement the policy even sooner, which will allow some young adults who would otherwise lose coverage — for example, because they are graduating this year — to keep it.

The new rule will provide significant help to a group that needs it.  One-third of adults aged 19-26 — over 10 million young adults — lack health coverage, the Urban Institute estimates.  That’s a larger share than any other age group.  Young adults are much less likely than older adults to have access to job-based coverage and, for those with low incomes, are no longer eligible for Medicaid or the Children’s Health Insurance Program due to age.

The Department of Health and Human Services estimates that 1.24 million young adults will gain dependent coverage through the new rule in 2011, slightly more than half of whom will have been uninsured.  The rest will primarily switch from coverage in the individual insurance market to their parent’s job-based coverage, which tends to be more comprehensive and affordable.

You can find other fact sheets in our Moving Forward with Health Reform series here.