Graduates' Gamble on Health Insurance May Be a Risky Bet

Graduation. Job search. Moving. Facing the real world.

For a recent college graduate, the summer months can be a whirlwind. And as the unemployment rate rises — with employers slashing 467,000 jobs in the month of June — grads can be so caught up trying to secure a job that they lose track of another essential: health insurance.

Stethescope and money
Stethescope and money

Although a recent study by the National Association of Colleges and Employers found that medical insurance is the number one benefit college students look for when choosing a job, this interest doesn’t always translate into action.

Whether grads failed to find a job, acquired an entry-level position that came without benefits, didn't have the money or simply thought they didn't need insurance, one-third of the 20- to 24-year old demographic was uninsured in 2006 — the highest percentage of any age group, according to the Centers for Disease Control and Prevention.

This deficit is one reason why the Obama administration is targeting young adults as part of its health reform overhaul.

"People generally put off health insurance because it's not mandated," said Steve Trattner, chief marketing officer at Cinergy Health. "It's just one of those necessary evils."

How to Find the Right Plan For You

When looking into insurance policies, it's first important for recent graduates to know their state's regulations on dependents. In some states, students can be kicked off of their parents' plans the day after graduation, while other states have more lenient policies. In Florida, for example, children can remain dependents until age 30 if they live in-state, are unmarried and have no dependents of their own, said Joel Cantor, professor and director of the Center for State Health Policy at Rutgers University.

Lawmakers are working to mend this state-by-state rift as part of the healthcare reform debates, through which a nationwide standard age for dependents has been discussed.

Once graduates or parents determine they're no longer covered, the next step is to figure out what options are best for their particular needs. Plans that offer low premiums and high deductibles are often good for the younger population because they're cheaper in the short term, Trattner said. Still, they can be risky in the event of a medical emergency.

"Every time you buy insurance you're making a tradeoff in choices," he said. "It's a gamble."

For those who expect to be without insurance for only a short period of time, one option is to forego less essential coverage like dental insurance, Trattner said. Accidental dental care is usually covered under the regular health umbrella, so unless the plan is really comprehensive, a person doesn’t get much more out of it than they pay into it, he said.

Another option for those expecting to find work quickly is to enlist in a short-term plan, which offers coverage options from 30 days to up to six or 12 months. These plans offer deductible and co-pay options similar to long-term plans, just for a shorter period of time.

Trattner typically doesn’t recommend these plans, though, because if doctors discover a problem while a person is enlisted in one, that individual can be put on a waiting list up to 24 months — or flat out denied coverage — when looking for a new policy.

And despite this generation's general good health, going without insurance is still dicey, said Jessica Vistnes, senior economist for the government’s Agency for Healthcare Research and Quality. Certain chronic diseases such as asthma, cardiovascular disease and diabetes commonly strike this population, and they're doing so at an increasing pace, she said. According to a report by the CDC, obesity rates among young adults ages 18 to 29 have tripled since the 1970s.

"What we find from market research is that … little things turn into big medical debt for this population," Trattner said. "They may wind up being one of those uninsured, not because they couldn't afford it, but because they no longer qualify."

Trattner stressed that these health conditions, along with a need for prescriptions and preventative care — such as gynecological visits for women — are among the top reasons the younger population needs health insurance. What's more, accidents are much more common among this demographic, which tends to take more risks than its older counterparts, Vistnes said.

To research the best plan, Trattner recommends skipping aggregate insurance sites and making a direct call to the insurance providers in each person's respective market. While compiled information sites can offer good advice, they are typically sponsored by a few agencies, so they don’t give the full picture.

The most important thing is to make sure you read all the fine print, Trattner said. Too often, people think certain measures are covered, only to discover an exclusion clause down the line — typically when it’s too late.

But regardless of which plan graduates choose, any defense provided by insurance is better than being left completely unarmed, Vistnes said.

"Even if it has a high deductible, having catastrophic coverage is important to protect against the unforeseeable," she said.