Out of Limbo: How health reform could help grads

Students preparing to graduate will have to contend with health insurance companies.
Students preparing to graduate will have to contend with health insurance companies.

By Julia Ernst and Kristie Kahl

A Rider graduate three years ago, Madeleine Johnson recently switched to a new job. Despite the fact that she now works full time, she will be without health insurance for her first 90 days, leaving her in the same situation she has been in, off and on, since 2006.
Under the stress of adjusting to a new job, planning a wedding and hoping she does not get swine flu, Johnson will just have to wait.

“Between paying for a house, car insurance and things like that, health insurance was the one thing that had to give,” she said. “It’s terrifying to know that the money you don’t want to spend on health insurance could come back to get you if you do end up needing it.”

Individuals between 18 and 29 years old are among the leading group of uninsured people in the United States, explained Dr. Anne Carroll, associate professor of finance. According to a Pew Research Center poll, young adults make up 30 percent of the total population without insurance. Only 53 percent of employed young adults are eligible for insurance through their work.

Johnson, who majored in English lit, held various full and part-time jobs after graduating. One offered health benefits, but she was laid off two months after becoming eligible for coverage. During another period, she paid $278 a month for coverage under her mother’s policy, an option for New Jerseyans under age 31. It was too much for her monthly budget.

Health care reforms now being debated (see box, p. 3) could help recent graduates like Johnson and current college students. All of the proposed plans include mandatory coverage for the 46 million Americans who don’t have health insurance and possible subsidies for people with part-time or entry-level incomes.

Don’t know, haven’t asked

Despite this hopeful possibility, the Pew poll also showed that only about one in three adults younger than 30 said they had heard a lot about health care reform. Few Rider students claim to know what the proposed reforms entail.

“I know nothing about Obama’s health care plans,” said Denis Grohosky, a junior psychology major. “Whatever it is, it will most likely affect everybody. Who doesn’t need health insurance?”

Rob Liao, a senior finance and international business dual major, isn’t sure what the proposed reform involves but realizes it might affect him directly.

“I care if it passes,” he said. “I might not have health insurance after graduating because I’ll be kicked off of my parents’ plan.”

What many young adults do not know is that New Jersey has an option that will cover them until the age of 30. According to the N.J. Department of Banking and Insurance (N.J. DOBI), there is a law that covers dependents under the age of 31, known as DU31. This law allows young adults to continue coverage under their parents’ group plan as long as they had “creditable coverage” at some point in the past. Under this policy, university plans are considered creditable coverage.

However, as the DU31 law is based in New Jersey, it is subject to several regulations. According to the N.J. DOBI, to determine whether a parent’s coverage is a group health benefits plan, the carrier does not have to be from New Jersey but the plan must be issued in New Jersey. For example, if a student’s parents have coverage through a New Jersey employer, that plan will be subject to the DU31 law, whether the carrier is based in or out of state.

To qualify for health insurance under the DU31 law, individuals cannot be married, though one does not have to live with a parent or parents to be eligible. The DU31 law “does not require that the young adult be economically depedent on the parent or live in the same house with the parent,” according N.J. DOBI. (For more information, visit http://www.state.nj.us/dobi/division_consumers/du31.html.)

Health insurance at Rider

Under New Jersey state law, “all full-time students enrolled in a public or private institution of higher education are required to be covered by health insurance, which provides basic hospital benefits,” according to the university Group Student Accident and Sickness Insurance Program (GSASIP). If students are not covered by a parent’s health insurance, the university offers insurance to students through the carrier T.L. Groseclose Associates, Inc. from Aug. 15 to Aug. 15 of a given year for $270.

Under this inexpensive plan, benefits for students are provided up to $2,500 for “covered medical expense incurred, inpatient, or outpatient as the result of a covered accidental injury or sickness.” Students must pay the bill for a hospital stay or emergency room visit initially, but the university’s carrier will eventually reimburse them up to $2,500, administators said.

The university also supplies a secondary insurance policy for athletes that covers all members of varsity teams for free. Initially, a claim will go through the athlete’s primary insurance, until it is exhausted or denied. Then, according to Head Athletic Trainer Tim Lengle, Rider’s athletic policy would pick up the full cost after that point. This policy only applies to injuries caused by athletics. If the cost of the injury exceeds $90,000, the NCAA provides a catastrophic policy that ranges to $20 million.

Basic and essential plans

Currently, New Jersey offers a list of individual basic and essential plan rates for adults under the age of 25. These rates are based on age, gender and location throughout the state. Individuals can choose from 11 carriers, where policies range from $128 to $939 per month for men and women under the age of 25. With age, the cost rises. Men are cheaper to insure than women.

According to the N.J. DOBI, under a basic and essential plan, any carrier must cover 90 days per year for hospitalization; $600 per year for wellness services; $700 per year for office illness or injury visits; and $500 per year for out-of-hospital diagnostic testing. The carrier must also cover biologically-based mental health services, alcohol and substance abuse treatment and physical therapy on a limited basis.

A basic and essential plan is usually the cheaper option. It has fewer benefits, but carriers may add benefits to any plan. (For more information on basic and essential plans, visit http://www.njdobi.org.)

Easy coverage, new issues

Despite the fact that Obama’s proposal would mandate health insurance for all individuals, the guarantee of health insurance comes with other concerns.

“You will have to worry about the cost of that coverage, since you will be obligated to get that coverage, and you may or may not be eligible for subsidies depending on what your income level is,” Carroll said.

The ability to obtain health insurance can be impacted by pre-existing conditions — diseases or illnesses an individual is affected by prior to applying for or beginning a new insurance policy — and may make it harder for students to obtain health insurance than they realize. Under a provision of Obama’s proposed reform, insurers would not be able to deny coverage to individuals because of a pre-existing condition.

The reform bills would also assist individuals or families who are considered near poor — making enough income to exist above the poverty line but not enough to afford health insurance. This subsidy may also help recent graduates who must pay for their own insurance but do not have high-paying jobs.

“I figured I wasn’t going to have health care because I knew once I graduated, it was going to get taken away,” said Mark Stephan, who graduated in 2009 with a degree in education. “That was part of the push for me to get a job — so I could get medical coverage. I knew it was a possibility I would have to buy it until I got a job, so that’s what I’ve done.”

Despite the general lack of knowledge among Rider students, Carroll urges students to start thinking about how they will obtain insurance after

“For college students, I think they are more likely to get caught [without insurance],” she said. “If you don’t get employer-sponsored coverage and you are forced to get individual coverage, it will be quite expensive. College students will probably feel the greatest impact of this reform. I think a lot of students will find themselves just on the line of eligibility for subsidies.”

For Liao, one of the main reasons he is concerned about the reform is his fear that his future employer won’t provide insurance, or that he won’t even find a job to pay for the insurance privately.

“The reform would make it cheaper for me to get health insurance, especially if I can’t find a job,” Liao said. “If I can’t find one, I can’t afford to pay for a really expensive plan, but I don’t want to go without it.”

The plan — for now

Currently, five separate bills are being discussed in Congress. Each of these bills would require Americans to have health insurance or pay a penalty; prohibit insurers from denying coverage or charging higher premiums for patients in poor health; create new insurance exchanges in which people could buy coverage at large group rates; provide tax subsidies to help low- and middle-class Americans buy insurance; and expand Medicaid to cover more poor Americans.

On Tuesday, health care reform took another step forward when the Senate approved “the Baucus bill,” which would impose new fees on the health care industry to expand coverage to Americans without insurance while also proposing a lower-cost coverage plan for individuals under 25.

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