A Break on Health Insurance for Young People

Children are generally dropped from their parents' health insurance when they turn 18 or 19 or graduate from college. But 16 states now require insurers to cover dependent children on their parents' policies until the kids are in their mid twenties -- and sometimes up to age 30.

The new rules can help cover adult children who don't have health insurance through their jobsQor don't have jobs. To qualify, grown kids must be unmarried and live in the same state as their parents. But they don't need to live with their parents or even be considered dependents for tax purposes.

This can be an attractive option for adult children who have health problems and could have trouble qualifying for affordable insurance on their own. But other young adults might be better off declining the deal. In many states, healthy people in their twenties can purchase insurance on their own for less than $100 per month. (Go to www.ehealthinsurance.com or find an insurance agent through www.nahu.org. That could be less than the cost of keeping a child on your family policy.

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In most states (other than New Jersey), insurers don't charge extra specifically to keep older children on your policy. But your rate might drop if you remove your child, especially if you're insuring only one child and can switch from family coverage to rates for a single person or a couple. You'd have to compare the price with what it would cost for your child to purchase individual insurance.

If you still have other children on your policy, you may be able to insure older kids at no extra charge (as long as your insurer doesn't base premiums on the number of children). That would be the best deal.

Extended dependent coverage is a particular boon in New Jersey, where unmarried kids who live in the state can stay on their parents' policies until age 30. Parents must pay about $200 a month extra, depending on their employer's plan, but that's still less than buying a separate policy in this high-cost state.

New Jersey requires insurers to charge everyone the same rate for individual policies regardless of age and health, so a 28-year-old would pay more than $400 per month for his own policy, and $200 or more for just a bare-bones plan, says Jim Stenger, a health-insurance agent in Morristown, N.J. Adult children will generally get better coverage at a lower price on their parents' plan.

For a list of each state's age requirements for dependent coverage, see the National Conference of State Legislatures' Web site. Note that these laws don't apply to employers who self-insure.