Many area employers will be hit with higher health care costs next year due to a new state law that requires them to extend health benefits to covered employees’ children until they reach age 26.
Effective Jan. 1, children under their parents’ group health insurance will remain eligible until that age even if they are not enrolled in college as long as they don’t marry, leave the state or obtain their own health coverage.
The state legislature originally passed the law in 2007 and revised it earlier this year. Currently, family plans typically cover young adults until they turn 19, or 23 if they are enrolled as a full-time student.
The change “is going to raise businesses’ premiums in the short term,” said Eric George, associate counsel for the Connecticut Business and Industry Association. “Immediately, monthly premiums are going to go up.”
Companies will decide on an individual basis whether to pass any part of the higher cost to employees.
Businesses that are self-insured or are regulated under federal ERISA laws do not have to comply with the measure. But businesses that buy coverage from a health insurance company — including most small businesses – will have to contend with the change.
The CBIA opposed the law when it originally came up for debate.
“It’s not because we don’t think people should have health insurance,” George said, “but we have to consider how much it’s going to cost businesses and individuals as a result.”
George noted that the state did not provide an estimate of how much the new law would cost businesses.
Based on data provided by the Office of the State Comptroller, it is anticipated that the state, as an employer, will provide coverage to an additional 3,100 adult dependent children when the state’s health contracts are renewed in 2009.
The estimated cost associated with the expansion of coverage for children of covered state employees is about $8 million. On average that’s about a $2,580 increase per child.
Legislators who pushed for the measure were trying to address the fact that a disproportionate and growing number of young adults ages 19 to 26 remain uninsured, state Rep. Linda Schofield (D-Simsbury) said at an Oct. 15 press conference.
That age group makes up 9 percent of the population, or about 306,500 individuals. Twenty-four percent of them, or about 73,000 people, are without health insurance, Schofield said.
That’s a much greater proportion than the 8 percent to 10 percent of uninsured individuals statewide.
“There are far too many young adults who are uninsured in Connecticut,” Schofield said. “This provides for young adults a more affordable and accessible option than buying individual insurance.”
Speaker of the House James Amman said the law moves the state closer to its ultimate goal of “health care for everyone.”
“The health care crisis won’t be solved all at once,” Amann said at the press conference. “We know because we have been working on it for years. Step by step we are getting closer to the solution. We are picking off as many uninsured as we can.”
That age group has a high uninsured rate because they are often in a state of transition, Schofield explained. Many young adults are recent college graduates who haven’t found a full-time job yet. Others who have jobs may not have completed their probation periods before their company health insurance coverage kicks in.
A lot of younger adults also go to school part time and work part time. Under the old law, they didn’t qualify for their parents’ benefits, and they didn’t quality for insurance offered at their job, Schofield said.
State legislators are making a push to inform the public about the new law now because many people don’t know it has been enacted, Schofield said.
“People may not realize that this option is included in their family benefits package,” she said.
George of the CBIA said some businesses are also unaware of the new law.
“They will be paying a lot more attention to it” once it goes into effect and premiums rise, he added.
Reader response:
“Why would we make a law and have exceptions to it.This does not help everyone but only a choice few.
How exactly does a company that is self insured or is under Federal ERISA able to be excempt form this new law?
There are still alot of young adults that do not have medical insurance due to this issue.” — Pat Hills, The HartfordÂ
