Adult Children Have Early Opportunity to Remain on Parent's Medical Insurance
Posted on Mon, Jun 14, 2010
A new medical insurance reform provision states that medical insurance will be extended to adult children up to age 26 under their parents' policies effective January 1, 2011. However, a survey conducted by Hewitt Associates shows that approximately 950,000 employees will be offered the option to cover their dependents much earlier than what the provision requires.
Hewitt had surveyed more than 500 large American employers, which represents almost 7 million employees with coverage. The results showed that about 1 in 5, or roughly 19 percent, of large employers plan on extending medical insurance to dependents up to age 26 earlier than what is required. Of all of those companies, 10% will offer medical insurance coverage earlier for all eligible dependents, and 9% will extend coverage for students that are graduating that are already insured under the medical insurance plan.
Approximately seventy-seven percent of employers are intending on waiting on extending coverage to eligible dependents until next year, when they will be required to extend coverage, which is the plan year that begins on January 1, 2011. 4% of large employers still don't know if they will offer coverage earlier or not.
The reason why a large percentage of large employers are extending coverage earlier is to boost employee morale and to earn goodwill from employees. This is especially helpful since a good percentage of adult children cannot find employment or lost their jobs during the recession. However, most companies are waiting to offer extended coverage because of the money it would cost and the paperwork that is involved.
About 57% of employers have already budgeted the cost of extending coverage to eligible dependents up to age 26. Of those, 18% are expecting to see less than a 1% increase in yearly medical care costs between the years of 2011 and 2014. 26% of companies estimate a 1%-2% increase, and 11% estimate a 2%-5% increase.
With this new provision, Hewitt predicted that an employer may cover 5%-10% additional adult children than they do today.