Health Insurance Options for Students

A story published in Kiplinger's Personal Finance

What is the top concern facing new college graduates? You might say a job, but in reality, it's probably health insurance.

Many insurance companies drop dependents from their parents' policies once they grab that sheepskin. Others limit a child's coverage to a specific birthday, usually ranging from 22 to 25 (check your policy's rules).

However, a student health insurance policy can help you (or your child) avoid a gap in coverage between graduating and landing a job that provides health insurance benefits. You'll have to act fast, though, if you're graduating this spring because student health insurance is available to full-time students younger than 30 (but continues after graduation). Assurant Health, the largest provider of student health plans, stipulates that coverage must begin at least 31 days before graduation. With most spring commencements set for the second half of May or first part of June, you need to apply now. Coverage and cost

Unlike applications for more comprehensive plans, the questionnaire for student health insurance is brief. For most plans, you can apply online. Applications for coverage usually are approved or denied within 72 hours. Disqualifying conditions include heart problems, cancer, diabetes, drug and alcohol abuse, gall bladder and kidney disease, HIV/AIDS and ulcers.

Student health insurance is generally a little less expensive than a similar short-term policy and has the advantage of being renewable for as long as you need it (as long as you pay the premiums.) Unfortunately, [sometimes] you're required to pay for six months or a full year of coverage in advance. Short-term policies, on the other hand, generally are good only for six months to a year. And, you have to reapply for coverage each time your policy expires, meaning you must be healthy enough to qualify.

Here's how they compare: A 22-year-old female non-smoker in Chicago would pay $66 a month for a student health policy with a $1,000 deductible and 20% co-insurance (meaning the insurer picks up 80% of a claim after the deductible is met). A similar short-term policy with the same deductible and co-insurance for the Chicago co-ed would cost $104 a month.

Both student health and short-term insurance offer deductibles ranging from $250 to $2,500. The higher the deductible, the less you will have to pay, but the more you will have to shell out if you are ill or an accident happens. Health insurance prices vary widely based on location because states mandate different benefits insurers must offer to members.

Reminder: If you're currently covered under your parent's health insurance plan, be sure to check when the insurance coverage ends.  Some policies cut coverage at the age of 22, while others continue to permit coverage.  Be sure to confirm benefits with the policy to ensure continuation of coverage.  If you're approaching graduation, now is the time to get your own health insurance policy!

This Month's Tip: Consider purchasing a life insurance policy as a college student.  The rates are typically very affordable at this age and by securing a policy the student is guaranteed to have a life insurance policy for later regardless of health changes.  Sometimes a health change occurs, which limits a person's ability to secure life insurance, so get it while your healthy!