Health Insurance 101 for Grads

One more reason your mother never wanted you to be in insurance sales: it’s complicated. With soon-to-graduate seniors entering a tight job market, reports that the new health-care reform law also reforms health insurance possibilities for this year’s grads have generated hope, and lots of questions. BU Today put some of those questions to University experts, and answered others with information from media reports.

What happens to graduating seniors who are insured through BU?
The BU-sponsored plan, administered by Aetna Student Health, covers students through August 22, says Karen Goyette, insurance coordinator at Student Health Services. That date gets you to within a month of September 23, when the new law allows young people to go on their parents’ plans until they’re 26.

So my parents’ plan can cover me after September 23?
In some, but not all, cases. Some families might have to wait until New Year’s Day 2011 to cover their uninsured children. The health reform law extends parental plans to children for the first plan year on or after September 23. For most big company plans, the new plan year doesn’t start until January 1, 2011.

Some insurance giants, prodded by the Obama administration, have announced that grads and other young people may stay on their parents’ policies until September 23, even though the federal allowance doesn’t kick in until that date. But the insurers’ allowance applies mainly to plans they sell directly to customers, not to plans that parents get through their employers, the Associated Press reports.

For those families who will benefit from the insurers’ allowance, the change depends on the insurer. Humana and United Healthcare say their allowance takes effect immediately. Kaiser Permanente will make the change sometime before September on its individual policies and is negotiating with employers that offer its group plans, USA Today reports. Aetna says it is “working with our customers” on keeping children covered.

WellPoint, which enacts the allowance June 1, runs Blue Cross Blue Shield plans in Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri, Nevada, New Hampshire, New York, Ohio, Virginia, and Wisconsin.

The Obama administration is encouraging employer-based plans to help uninsured children. It announced that employers who cover children immediately will not be taxed, nor will their employees be taxed, on the value of coverage extended before September 23. Some employers had fretted that the IRS might deem as taxable income any coverage offered before September 23.

What’s the advice if my coverage lapses, regardless of the date?
Other than avoiding getting hit by a bus during the gap, the best tip is: geography can be destiny. Depending on where you live, you might be able to get help.

“Students who are residents of Massachusetts can apply for coverage through the Connector,” says Alan Sager, a professor of health policy and management at the School of Public Health. The Connector is the state agency that helps residents find insurance, including low- or no-cost plans for the needy, under the state’s mandatory insurance law.

New York has a similar program, Healthy New York, according to Goyette. Other states may offer graduates short-term plans (say, three or six months) that could fill the gap, says Sager, codirector of SPH’s Health Reform Program. But be warned: such plans may not cover preexisting conditions and may charge steep premiums.

“Students might consider fairly high deductibles plus high-dollar coverage at the upper end,” says Sager. “This would oblige them to pay costs under the deductible. But it would work to hold down premiums, while also protecting them and their families against rare but catastrophically crushing health-care costs.”

If all else fails and you wind up uninsured and hit with a big medical bill …
Sager’s suggestion: “Don’t be shy: request a reduction in the charges. Try to negotiate a substantial discount — 50 percent or more if possible.” Doctors and hospitals might grant a discount in exchange for prompt payment. If a recalcitrant billing office offers no more than 10 or 20 percent off, you can phone the office of the hospital CEO or the manager of the doctor’s practice, Sager says, and explain your financial situation. Oh, and mention that the hospital or practice will still make money off you, even with a big discount, he says.

Rich Barlow can be reached at barlowr@bu.edu.