One of the provisions in the health care reform bill allows children to remain on their parents’ health insurance policies until the age of 26. You may recall that a couple of years ago, Colorado passed a law allowing children here to remain on their parents’ policies until the age of 25, so the new law won’t have as much of an impact here as it will in states that currently boot young adults off of their parents’ coverage at younger ages.
Any measure that results in more young adults with health insurance coverage is a good start, since that demographic tends to have a relatively high percentage of people without health insurance. But whether a family should utilize the option to keep kids on their parents policy will definitely vary from one family to the next.
If the family is covered under a group health insurance policy and has more than one child, it will likely be advantageous to keep the group coverage for the kids. This is because group plans typically charge a set dollar amount for children, regardless of how many children are on the policy. Group policy pricing in Colorado typically has four levels: employee only, employee and spouse, employee and child(ren), or family coverage, which includes employee, spouse, and child(ren). On a policy with that sort of design, an employee with one child will pay the same premium as another employee with four children, assuming the employees are the same age. With that type of coverage, it makes sense to keep all of the children on the policy for as long as possible, since as long as at least one child is covered on the group policy, it will cost extra to insure any other children on their own.
But a family with just one adult child who still qualifies for coverage under a parent’s plan might be better off financially by opting for an individual health insurance policy for the child. This is because the premium to add a child or children to a group policy is often quite a bit higher than the premium that would be charged for the child to get a medically underwritten individual policy. Obviously this only works if the child is healthy.
Some employers pay a significant portion of the premiums for dependents, and if that is the case for your family, it likely makes sense to keep children on your policy for as long as possible. On the other hand, if you’re on the hook for the whole premium for any dependents, it may be worth your while to shop around and see how much it would cost to purchase an individual policy for your child.
