Tips for Purchasing Health Insurance After College Graduation

Purchasing Health Insurance After College Graduation
College graduation brings many life–altering changes and marks an important transition
into adulthood. In making important post–graduation decisions, such as where to live
and work, be sure that you do not forget to secure a health insurance policy. A survey of
U.S. insurance consumers by the National Association of Insurance Commissioners
(NAIC) indicated nearly a fifth of young singles would forgo health insurance to save
money. However, forgoing health insurance is a dangerous decision. Accidents and
unforeseen illnesses can be financially devastating. It is vital that you know when your
coverage ends after graduation and weigh carefully the repercussions of not being
covered. You should seriously consider buying health insurance suited to your needs
prior to graduation.
Review Your Health Insurance Needs
First, be sure you are aware of the exact date your health coverage expires under your
parents’ policy. Some health insurers terminate coverage upon graduation, while others
set a particular age limit. You will want to ensure there is no lapse in health coverage
from the time your coverage under your parents’ policy expires, until your new policy
takes affect. Choose the kind of policy that has benefits that most closely fit your needs.
Does your family have a troubled health history that puts you at risk for developing a
medical condition? If so, you will want to choose a health plan that has more extensive
coverage, even if it means paying higher premiums while you are young and healthy.
Know Your Options
There are numerous health insurance options available for recent graduates:
• Continued Coverage under Parents’ Plan
o Some states recently have passed legislation requiring health plans to
extend coverage for a dependant beyond college graduation. Check with
your state insurance department to find out if your state has similar
legislation. The laws may require you to prove current residence with your
parents, or an unmarried status, so it is important to inquire about the
stipulations involved in your state’s statutes.  • Consolidated Omnibus Budget Reconciliation Act (COBRA)
o If you have been covered under your parents’ health insurance policy
while you were in college or by a plan offered through your college, often
this coverage ceases when you graduate. For these periods of no coverage,
you should check to see whether you can extend your parents’ coverage
for a short–term period under COBRA. This will provide you with the
health insurance you are familiar with, though it often comes at a high
• High–Deductible Major Medical Policies
o If you can’t afford regular health insurance, a more affordable option is
purchasing a high–deductible, major medical policy that only covers
serious or catastrophic health costs. It will offer lower premiums than
regular health insurance policies and help you cover bills for “major”
medical events, such as surgery, hospitalization or emergency room care,
but typically will not cover routine doctor visits or check–ups.
• Short–Term Health Insurance
o Short–term health insurance policies are available for lower premiums
than other types of health insurance and may provide the exact coverage
you need as you transition from college to permanent employment. Short–
term health insurance is not intended for those with pre–existing medical
conditions (injuries or sicknesses acquired prior to the health policy issue)
and is typically available only for a short period time (between six to 12
months). Short–term plans are sometimes purchased on a month–to–
month basis and generally have more limited benefits, exclusions, and
caps than traditional health insurance plans. Some colleges also offer an
option to extend a university health plan.
The following two types of health–related services ARE NOT health insurance plans:
• Discount Plans — Discount plans are not health insurance plans, and participants
do not have the same protections as they would under licensed health insurance.
Consumers should thoroughly investigate any plan promising deep discounts for a
“low” monthly fee and carefully weigh the benefits against the costs.

• Non–Licensed Risk–Sharing Plans —You may receive offers to join a group or
association that will take your monthly payments, put them in a savings account
or trust with other participants’ money, and then help pay some of your health
care costs as needed. Participants in these plans do not have the protections
available to purchasers of licensed insurance plans. Consumers should thoroughly
investigate such plans before joining.  Research to Obtain More Information
• In addition to researching temporary coverage options available after graduation,
you should be aware of the varied permanent health plan options available once
you purchase individual coverage or acquire permanent employment that extends
group coverage as a benefit. Indemnity Plans, Preferred Provider Organization
(PPO) plans, Health Maintenance Organization (HMO) plans, and Point of
Service (POS) plans are all types of health insurance plans that should be
researched before purchasing health insurance.
• Research is by far your best protection. Not only can you obtain health insurance
quotes over the Internet, you also can use the Internet as a research tool,
determine which coverage best fits your needs, and shop around for companies,
agents, premiums, and coverage.
• Double check the company and agent with your state insurance department to
confirm that they are licensed to sell health insurance in your state. You can also
check the Consumer Information Source (CIS) on the NAIC Web site to
determine how many consumer complaints have been filed against the company
from which you are thinking about purchasing insurance