Many Graduates Lack Health, Other Types Of Insurance
It's summer time. The schoolbooks are closed, and the lakes and beaches are open. But this transition has caused many graduates to join the ranks of the estimated 40 million or more Americans without health insurance.
According to U.S. Census Bureau statistics, young adults age 18 to 24 are more likely than any other age group to lack health insurance. In fact, nearly one in three has no coverage. Among young adults age 25-34, the number improves only slightly to roughly one in four.
Why the daunting statistics? Many young adults are not aware of how their health insurance needs changing after graduation. New high school graduates over age 18, who are not enrolled in school full-time, in most cases, will no longer be eligible for coverage under a parent's health insurance. Full-time college students may retain coverage under their parents' policy, but upon turning age 23, they too will be on their own, regardless of educational status. Additionally, students who take time off from college or drop to part-time status will usually lose coverage under a parent's policy.
Some also think they are not at risk, but young adults who believe they do not need health insurance are wrong, says Madelyn Flannagan, Independent Insurance Agents of America (IIAA) manager of consumer information services. "Illness and injury know no age limit and insurance is one's major protection against the potentially devastating financial risks associated with health-related problems."
After graduation, IIAA and College Parents of America advise young adults to look to their employer for health coverage. More than 70 percent of high school graduates and more than 80 percent of college graduates who are employed full-time are eligible for employer-sponsored health insurance, according to the U.S. Bureau of Labor Statistics (BLS).
Still, the bureau estimates that 21 percent of full-time employed high school graduates and 7 percent of college graduates with full-time jobs have no health insurance. Additionally, many companies now mandate employee probation periods of 6 months or more before employer-sponsored health coverage and other benefits go into effect.
The statistics are much more daunting for part-time employees. Only 35 percent of high school graduates and 48 percent of college graduates with part-time jobs are even eligible for employer-sponsored health insurance. Furthermore, there are thousands of high school and college graduates who are unemployed, many who are without health insurance.
"The thousands of young adults making their move into the world this summer without job offers face a number of challenges in addition to finding a job, one of the most important of which is protecting their financial security in the event they become sick or injured," notes Richard M. Flaherty, president of Washington, DC-based CPA, an advocacy organization representing the interests of college parents, students and prospective students.
For those graduates who are not employed, finding affordable health insurance can be extremely challenging, but not impossible. IIAA and CPA advise young adults without health insurance to visit an independent insurance agent who can research the network of companies that specialize in individual health policies to find the best deal. Also, some colleges offer individuals group interim health coverage for recent graduates. Former students should check with their college or university to see if it offers such benefits.
In addition to health insurance, IIAA and CPA advise high school and college graduates to consider three other types of coverage: auto, renters (or homeowners) and life, all of which are outlined below.
Auto Insurance: If you own or lease a car or plan to in the near future, you will need to purchase auto insurance. If a parent co-owns your car and you live at home, you can usually stay on your parents' insurance policy. But if the car is titled in your name and you live away from home, you will need to purchase your own insurance.
This is good news for parents—releasing a young adult child from their auto policy can reduce parents' insurance premiums by up to two-thirds—but not such good news for young drivers who face higher premiums until age 25 or until they are married. There are ways to reduce your auto insurance costs, though. Some cars are more expensive to insure and rates vary widely by area. Consider a less expensive car and, if moving to the city, you may want to put off your car purchase. Drivers who live in the city tend to pay more for car insurance as well. For a list of ways graduates can save money on auto insurance, visit the "Consumer Information" section of IIAA's Website.
Renters (or homeowners) Insurance: While you probably would not think about buying a home without protecting it with homeowners insurance, many renters neglect to protect their possessions by purchasing renters insurance. If you rent—as many recent graduates do—neither your parents' nor your landlord's insurance will cover your possessions or protect you from liability. Even the smallest apartment can easily contain personal property worth thousands of dollars. Because you are not insuring a building, renters insurance is surprisingly inexpensive—often only $100-$200 a year. For a copy of the free guide, Renters Insurance: Shattering a Few Myths, consumers can call 800-261-IIAA (4422).
Life Insurance: If you are single with no dependents and do not own your own business, you probably don't need life insurance. However, if you are married or are soon getting married, you should consider purchasing life insurance even if you do not have children. In the event of untimely death, life insurance will help cover such debts as charge accounts, student loans and house payments. Buying life insurance while you are young also will allow you to take advantage of low premiums.
IIAA offers a free guide to help students, graduates and their parents navigate the maze of insurance options. The Graduate's Independent Guide to Insurance is available by calling 800-261-IIAA (4422).