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College Grads' Parting Homework: Pick Health Insurance

Alexander Lataille, 23, of Laurel, Md., graduated from college last spring and was worried about being kicked off his parents' plan Courtesty of Alexander Lataille hide caption

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Courtesty of Alexander Lataille

Alexander Lataille, 23, of Laurel, Md., graduated from college last spring and was worried about being kicked off his parents' plan

Courtesty of Alexander Lataille

As the season of college commencements approaches, planning for the ceremonies isn't the only topic grads-in-waiting need to discuss with Mom and Dad.

If students have been covered by the college health plan and want to get onto their parents' insurance plan, they have 30 days from the date their student coverage ends to do so. Miss that window, and they may be left out until the plan's next annual enrollment period, usually at the beginning of the new year.

"The [college] coverage will probably end in August, but students should check the date," says Aaron Smith, co-founder and executive director of Young Invincibles, a health care advocacy group for young adults. "It's an important piece of information. They could have a gap in coverage." The group has created a toolkit for new grads to help them understand their health insurance options.

Under the health overhaul law, young adults can stay on their parents' health plan until age 26. They're allowed to even if they're in school or financially independent, and even if they're married. The only real exception is if they have an offer of health coverage through their own employer. In that case, even if it's a bad policy, they can't remain on their parents' plan.

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Young adults have one of the highest rates of uninsurance, estimated at up to 30 percent. The health care overhaul has helped make a dent in that figure: At least 600,000 young adults have signed on or stayed with their parents' plans since the provision became effective last fall.

One of them is Alexander Lataille, 23, of Laurel, Maryland, who graduated from college last spring and was worried about being kicked off his parents' plan. But Blue Cross and Blue Shield in Rhode Island, where his parents live, adopted the under-26 provision early — and that kept him insured, even as he took jobs that didn't offer health coverage. "It was a big relief," said Lataille, who has asthma.

But while federal officials and consumer advocates are pleased that demand for dependent coverage appears greater than projected, some employers are worried about the cost of the additional coverage.

Helen Darling, CEO of the National Business Group on Health, which represents more than 300 large employers, said employers generally don't like the idea of anything that will add to their health costs. "I don't think anyone is eager to spend more money," Darling said. "This is not something employers would have done on their own."

Adding young adult coverage is likely to increase average family premiums by about 1 percent, according to the federal estimates.

Unfortunately, graduating students who are currently uninsured don't get a special enrollment opportunity under the law, says Smith. Those students likely have to wait until the next annual enrollment period to sign on with their parents' plan.