There are health reform laws in place that allow young adults to stay covered by their parent’s health plans until they reach age 26. Employers have started charging more on the cost of premiums for parents who include their adult children. It seems that employers have finally found a way to push that cost right back onto their employees.
In September of 2010, a portion of the Affordable Care Act went into affect that was designed to provide health insurance coverage for young adults who were between the ages of 18 and 26. They could now be covered under their parent’s health insurance plans.
This law enabled one of the largest uninsured portions of Americans, the young adults who either were in college, or who had recently graduated, to be able to have health insurance coverage. Previous to this law, young adults could only be covered by their parents health plans until they reached the age of 18, (or, in some cases, age 21). After that, these young adults would suddenly find themselves without health insurance coverage.
Employers who offer health insurance plans to their workers quickly found that they were expected to cover more than just their employee and that person’s spouse. Adding another dependent to a health insurance plan means that there will be more expenses that the employer would have to cover.
Recently, employers have found a way to push that cost back onto their employees. Instead of offering a health insurance plan with a set premium, they are beginning to charge “per participant” or “utilized pricing”. This means that a worker’s payroll contributions to their health insurance plan will increase with each dependent the worker adds to their coverage.
In the past, a typical employer sponsored health insurance plan would cover the employee and his or her spouse. If it was a “family plan”, then it might cover the young children of the employee. This system is becoming extinct. Soon, if parents want to add their college-aged child to their health insurance plan, well, it is going to cost them.
One of the reasons why employers are using this strategy is so that they can push some of the company’s health care costs onto their workers. Another reason is because surveys show that the recession has left many young adults unable to find employment. If they cannot find work, then they cannot get health insurance coverage through their own employment. This means more young adults will be eligible to be covered by their parent’s health plans.
In short, it is clear that employers have found a “loophole” that enables them to opt-out of following the intent of the health reform law that requires insurance plans to cover young adults who are under the age of 26. Employers have discovered that if they make it too expensive for parents to include their college-aged children on their health plans that the employer can save money on the company’s health care costs.
Image by allison johnston on Flickr