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It is summer time: Is your health insurance on vacation?

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Author’s note: This article is created as a result of a conversation I had with a client and friend about what to do when a child graduates and chooses to take a break from school instead of continuing on towards several years in college.

With the summer season now in full swing and high school and college graduations in the past, many parents and students are contemplating their next moves. Whether those decisions include further education for newly-graduated adults or applications leading to promising and gainful employment, there are a few things to consider. From the insurance vantage, time is of the essence.

“Janet” and “Bill” began to consider the insurance game long before their children, Sarah and Steven became seniors in high school. Through Bill’s employment, the family enjoyed health care coverage that covered the health needs like immunizations, checkups and routine care, and doctor and hospital visits. With the children turning 18, Bill and Janet became aware of the clock ticking that represented the time left for their children to be covered under the same policy. The newly-passed legislation became a concern for the family in the translation of what would still be covered and what benefits may change.
Bill and Janet decided to revisit the paperwork that showed to coverage for the family. In addition, the couple decided to take things a step further and talk with a health insurance agent to compare coverages and plans that may be available, similar to a comparison shop scenario.

The information the parents discovered required several “what if” scenarios. Being twins, Sarah and Steven turned 18 on the same day. The health policy the family had outlined that coverage would continue as long as premiums were paid until the children turned 19 years of age or out of school full time. To comply with changing regulations, an addendum to the policy had been added to provide continuing coverage to the children until they turned 26 years of age provided they were still attending school full time. For the twins, this meant that one of the scenarios visited needed to include this possibility as well as the possibility that either or both decided to take a break between high school and college.

For this scenario, there are two main facts that must be considered. The first is the present health of those covered by the policy. The increasing statistics of adverse health related conditions requiring medications and more-frequent-than-normal doctor’s visits details how expensive life may become if a person is no longer covered by a health insurance plan. Individuals who have been prescribed and are taking medications may find it difficult to pay out-of-pocket costs for the necessary medical help they may need.

The second fact to consider is that once coverage has been cancelled on a person for a specified amount of time with no replacement coverage, most health insurers may establish a period of time where pre-existing conditions may not be covered under a different or reinstated policy. What this means is that any prior-established medical history, either covered by a policy or diagnosed while not insured, may be subject to waiting limits and periods of limited coverage. While the regular limitations and exclusions may already be established by the policy itself, lacking a “continuation of coverage” statement may end up costing more in the long run.

So, what does this mean for Bill and Janet? It means that an ongoing discussion with Sarah and Steve is vital to determine the future plans that the teenagers may be considering. Bill and Janet discovered that Bill’s policy through work will cover the children through age 26 provided they are seeking a full time education. The verification for this is quite easy…simply they will need to provide the insurance company with valid proof of enrollment into their college or university.

Steve, however, has become insistent that he is not interested in college at this time, but would rather join the military first with the hope to defray some of his college costs later. This scenario is not uncommon, but it does still establish a period where Steve will be disenrolled from his parents’ health insurance policy. Provided that creditable coverage is allowed for Steve during that period of time, should he want to enroll in college, he can provide the insurance company after he is enrolled in college, copies of his enrollment status and proof that he had coverage during the time he did not through his father’s employer. Depending on the insurer, there may be additional steps required before coverage is reinstated.

While this scenario represents a “what it . . .” it is representative of what many families face during summer months. A basic student short term policy may be available for college students, however it may not cover the entire 12 month year. Long story short, it is vital for not only parents, but students alike to know the basics of their health insurance policy so that surprises are not found after coverage is required. Keeping on top of the insurance situation will help to spot how changes will affect the family. Don’t be caught by surprise!

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