Health insurance options for new grads

April 09, 2006|By CAROLYN BIGDA | CAROLYN BIGDA,TRIBUNE MEDIA SERVICES

In the next month or so, college graduates will step on stage to pick up their degree - and frequently step off as another member of the uninsured.

The reason: Most health plans drop coverage for dependents once they are out of school. If you lack a job with a medical plan, you'll have to buy your own.

Individual insurance has its bonuses, mainly that it stays with you no matter what job you have. But it can get confusing and expensive.

In Columbus, Ohio, for instance, a 25-year-old woman who opts for a $5,000 deductible would pay $40 a month, according to eHealthInsurance, an online marketplace for individual and family plans. For a $1,050 deductible, she'd pay $23 more.

But in other cities, the difference is far greater. The same woman would pay $35 a month for a $4,000 deductible in Los Angeles. For a $1,100 deductible, the premium catapults to $524 a month, in part because of less competition for certain types of plans in California.

To minimize the cost, especially with such other expenses as housing and student loan payments competing for your paycheck, consider these options.

Get a temporary policy

If you'll be without health insurance for only a few months, opt for high-deductible, short-term coverage. You often can become insured within one day and stay covered for up to 12 months.

Keep it minimal

For longer-term insurance, anyone in good health may want a plan with the highest deductible and the lowest monthly premium. Be sure you're comfortable with the deductible, as well as any co-payments you'd have to make. For instance, if the 25-year-old woman opted for the lower deductible in Los Angeles, she'd be on the hook for a 20 percent co-payment after insurance kicks in.

To help defray costs, set up a health savings account. As long as your deductible is $1,050 or more (for singles), you can make tax-deductible contributions to an HSA. Earnings grow tax-deferred and withdrawals are tax-free if used for qualified medical expenses.

Carolyn Bigda writes for Tribune Media Services.

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