Healthcare loophole may impact young adults

August 26, 2010 7:24:19 PM PDT
If you're a recent college graduate you're probably struggling just to find a job. Now there's a new law that's supposed to make sure young adults stay covered under a parent's insurance. The only problem, just like waiting room at the doctor, there's a bit of a wait for coverage too.

It was a joyful day when Renee Vargas graduated from UC-Santa Cruz. However, the joy was soon replaced by worries.

"Absolutely terrifying and it's really hard to find a job and don't have insurance," she said.

Renee and millions of college graduates face a double whammy. They are emerging into a sluggish economy with scarce jobs and suddenly no more coverage under their parents' health insurance.

"It's nerve racking and graduating and trying to find a full-time job that's benefited or you're not covered on someone else's insurance," Renee said.

But it won't be an either-or proposition soon. the health care reform bill mandates health plans that offer dependent coverage must continue covering children until they reach 26 years of age. That's a big relief to Renee's dead, Antonio Vargas.

"It was like euphoria, like I hit the lottery," he said.

"I was so excited, my dad called me and said, 'happy birthday you have insurance until you're 26,'" Renee said.

However, the euphoria was short lived. Antonio received a letter from his insurance carrier, Blue Shield of California and it said good news. Because of the new law, Renee would be covered for three more years.

However, two weeks later, Antonio received a second letter saying it was all a big mistake.

"Oh, just kidding, you're not covered anymore," Renee said.

"They made a mistake, she did not have coverage so well too bad, I said what do you mean, so I called them, they went around and around," Antonio said.

Two conflicting letters, Antonio couldn't get answers what about the new law? Renee is only 23.

"I know Michael Finney and Channel 7 and I knew you could help me out," Antonio said.

We checked it out and turns out the new law comes with new complications. The provision on adult coverage doesn't' take effect until Sept. 23 and even then, insurers don't have to cover the older children until the next time the health plan renews and usually that's once a year.

However, to avoid gaps in coverage, major health insurers including Blue Shield agreed to start covering adult children right away. That's why Renee got the first letter with the good news, but why the switch?

"We are looking at internal belt tightening and this is just one area where we are going to follow federal requirements," Mary Currie from Golden Gate Transit said.

Another twist is that Antonio's employer is Golden Gate Transit which is self insured and Blue Shield only manages its claims. Golden Gate Transit won't start covering adult children until the law requires it at the next renewal period in July 2011.

"Blue Shield certainly can say they would cover these folks if we would but it comes down to a business decision," Currie said.

She says covering adult children now would mean renegotiating a dozen union contracts and coming up with a $250,000 extra for costs.

So Renee will qualify for coverage under the new law, but there is a gap to fill between now and then.

"You guys are fantastic. You got to open doors to see what's going on. Just give me the answers and I'm happy," Antonio said.

Many insurers are offering coverage right now, but there are plenty of conditions. For example, Blue Shield will only cover children who were already on a parent's plan as of June.


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