Fine Print Complicates Effort To Insure Young Adults

The federal government, which is the largest employer in the nation, says current law will likely keep it from following the lead of some private insurance companies that will begin offering coverage this year to young adults.

Many parents breathed a sigh of relief when they heard that health insurance companies were opening up coverage to young adult children. But lots of others – including those who work for the federal government – probably won't be able to get that coverage until next year.

The federal employee health insurance program has announced that it is unlikely this year to offer young adults the ability to remain on their parents' policies until the age of 26. That means the government, which is the largest employer in the nation, will not follow the lead of some private insurance companies that will begin offering such coverage to young adults by June 1.

The health care law passed last month requires insurers to offer to keep adults younger than age 26 covered through their parents' health plans. That provision goes into effect in September, although for many insurers the change won't occur until the new plan year, which generally starts in January.

But last week United Healthcare, WellPoint, Humana, independent Blue Cross and Blue Shield plans and Kaiser Permanente said they will offer such coverage immediately or by June 1. That came as a relief for many young adults, including those slated to graduate this spring who faced a loss of coverage.

The Office of Personnel Management website says that young adults whose parents are enrolled in the Federal Employee Health Benefits Program (FEHBP), which covers more than 8 million people, would most likely not be able to receive such coverage before Jan. 1, 2011, based on current federal law.

"Though we are eager to provide coverage to young adults prior to January 1, the current law governing the FEHB Program specifically prohibits us from doing so," an OPM statement updated last Friday said. "Unfortunately, this does not allow flexibility for FEHB plans to provide coverage to other adult children until the provision" in the new health law becomes effective in September. According to the statement, the law defines dependent family members as unmarried children under age 22 and that is restricting OPM actions. It added that OPM officials are working with Congress on the issue.

OPM notes that young adults turning 22 are covered for an additional 30 days under their parents' plan, as also noted in a story by the Federal Times. During that time, they can keep insurance for an additional 36 months through the Temporary Continuation of Coverage (TCC) program. Enrollees pay for the entire cost of the insurance.

OPM did not respond to repeated requests for interviews over several days.

Bridging The Gap

Expansion of coverage to young adults is a top priority for the Obama administration, and Health and Human Services Secretary Kathleen Sebelius has praised the voluntary actions by insurers "to bridge the gap between now and the fall when the law becomes effective." She said she hopes other insurers will follow suit.

The agency had no further comments about how federal employees would be affected and referred questions about FEHBP to OPM, said Jessica Santillo, a spokeswoman for HHS.

Many people are confused about this provision in the law. Experts say parents should take a close look at their policy or contact their employer's HR department.

The eligibility may depend largely on what kind of insurance the parent has:

-- Individual or family coverage purchased directly from an insurance company.

-- Coverage provided by an employer that buys the insurance policy from an insurance company. These firms are called "fully insured."

-- Coverage provided by an employer that pays the medical bills themselves. These companies are "self-insured." Most large companies offer insurance this way. Last year 57 percent of covered workers were in such plans, according to the Kaiser Family Foundation, although many employees do not realize that because their employers contract with traditional insurance firms to administer the plans. (KHN is a project of the Kaiser Family Foundation.)

The offers made last week by the insurance companies would apply to individual or fully insured plans.

Most of the insurers who decided to offer early coverage for young adults say they are also encouraging self-funded plans to follow their lead. However, the insurers have no authority to require that because the employers control the plan. Making changes mid-year is complicated for those plans, officials say.

"Clearly many people are thinking about what's the point of dropping" college graduates off in the summer "and then picking them up again in January, but again the pricing is very important," said Gretchen Young, senior vice president for the ERISA Industry Committee, which deals with employee benefits issues for major employers that use self-insured health plans. She mentioned that the cost for some of her organization's larger members to extend coverage to young adults is $1 million to $2 million annually.

"We're still trying to figure out the rules so we can implement it for Jan. 1. Thinking about accelerating that schedule when we don't know what the rules are is really tough," Young said.

This story was produced through collaboration between NPR and Kaiser Health News (KHN), an editorially independent program of the Henry J. Kaiser Family Foundation, a nonpartisan health-care policy research organization. The Kaiser Family Foundation is not affiliated with Kaiser Permanente. Copyright 2010 Kaiser Health News. To see more, visit http://www.kaiserhealthnews.org/.

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