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Adults 'piggyback' on parents' insurance

The Baltimore Sun

NEW YORK -- Not only are children moving back home after college and asking their parents for monthly subsidies, but in a growing number of states children can now stay on their parents' health insurance plans well into their 20s.

Call it another example of adultescence. With 18- to 34-year-olds the fastest-growing group of uninsured, states are extending the time that children can be dependents for insurance purposes.

In New Jersey, which enacted the highest age limit this year, children can "piggyback" until they turn 30, as long as they live in the state and don't have their own children.

The trend stems from a concern that a healthy - and profitable - segment of the population is dropping out of the insurance pool. About half of all states have studied such proposals, and at least nine have passed laws, eight of them since 2003 and three this year, according to the National Conference of State Legislatures.

Hilary Shinn, 23, of Wall Township, N.J., who likes competitive surfing and snowboarding, was graduating from Rutgers University in spring and had not decided whether she would have health insurance. "I'm a little accident-prone," said Shinn, who had a skateboarding accident on her way to her last class in May. "It didn't really hit me until my mom brought it up: 'Hey, you are not going to be covered when you graduate. Let's figure something out.'"

The New Jersey law allowed Shinn, who started graduate school at Monmouth University this semester, to stay on her father's plan, for an additional premium.

In contrast, many of her friends are without health insurance. "If they get sick, they just don't address it, on the hope it will go away," she said.

About 30 percent of adults ages 18 to 24, and more than one-quarter of adults 25 to 34, are uninsured, though the average for all age groups is 16 percent, according to figures released by the Census Bureau last month.

It is not known how many people have taken advantage of extended coverage, because private companies administer policies and most of the changes have only recently taken effect.

The rise of uninsured young adults results from two main economic forces, analysts say. Changes in the workplace mean that fewer jobs now have full benefits, which disproportionately affects the newest workers. In addition, the rising cost of premiums, whether shared with an employer or paid individually, makes insurance less attractive to a relatively healthy population.

"It's different from a generation ago," said Katherine Swartz, a professor of health policy at Harvard University who is the author of Reinsuring Health, a new book on the uninsured population. "We have so many people not used to having health insurance."

For years, children have been allowed to stay on their parents' health insurance until they turned 19, or until they turned 22 or 23 if they remained full-time students.

Some of the laws extending the age of coverage allow insurers to charge extra premiums, which vary depending on the plan. They also have various restrictions, sometimes requiring that the child be a full-time student, be unmarried, reside in the state or even live with the parents.

In general, these laws do not apply to insurance plans financed by the employer - as opposed to plans in which the employer buys coverage from an insurance company - because self-insured plans, favored by some larger companies, are shielded from state rules and laws under the 1974 federal Employee Retirement Income Security Act.

Shinn's family pays several hundred dollars a month to add her to her father's plan, which is through his employer, Systems Technology, a satellite communications company. She could have bought insurance for a similar price, but her father's plan provides better coverage, said Deborah Shinn, her mother.

"I know that our children, if they didn't have family behind them, would never have an affordable choice," said Deborah Shinn, who has four children. "Between car insurance and just buying books for schools and normal day-to-day expenses, I really feel that she would never be able to earn enough income to cover the things that are important for us to have in place for her."

Before this year, laws extending health coverage had been passed in Colorado, Massachusetts, New Mexico, South Dakota and Texas. Utah, where young Mormon men commonly complete two years of missionary work, passed the first law, in 1994. The governors of Delaware and Rhode Island signed such laws last July.

New York state has three bills in legislative committees to raise the age limit for children to 25, with various restrictions. Connecticut has a similar proposal in committee.

The availability of health insurance in the workplace has become a problem for young adults. One reason employers are reluctant to hire full-time employees is the rising cost of health insurance and other benefits. The percentage of employers offering health insurance dropped to 60 percent in 2005, down from 66 percent in 2000, according to a survey of employers conducted by the Kaiser Family Foundation.

Thus, new graduates, from high school and college, are entering a job market that is increasingly characterized by consulting, freelance and contract jobs.

And many employers that offer insurance are asking employees to shoulder a higher share of the premiums, another reason young adults decline coverage, said Laura Tobler, a health policy analyst for the National Conference of State Legislatures. "It's a cost-benefit analysis," she said.

As a result, she said, states are "looking for ways to reach out to these folks and doing it in the least expensive way possible."

Susan Pisano, a spokeswoman for America's Health Insurance Plans, an industry group, said that while insurance companies generally did not oppose laws that extend the age limit by a couple of years, New Jersey's law, with the age ceiling of 30, might take it too far.

"The law in New Jersey has the potential to drive up health care costs for employers, whereas the other ones do not depart as radically from the current situation in those states," Pisano said. "Our members have been comfortable with what is going on elsewhere."

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