Young adults who need health insurance have more options under the health care overhaul, which generally allows them to stay on their parents’ plans until age 26. But employers have new options, too: They can encourage young employees to join Mom and Dad’s plan rather than sign up for the company policy.
Experts say the practice is uncommon, but some think more employers may consider this approach in the future.
When the small Philadelphia company where Ross Burlingame works suggested he sign up with his parents’ health plan, the 24-year-old was taken aback. Could his company legally require him to go on his parents’ plan, though its coverage wasn’t as good?
After discussing it with the company’s financial manager, he came to believe her suggestion was well intentioned. She offered him a $400 monthly voucher to use for either plan. If he went on his parents’ plan, their premium increase would probably be smaller than. But if he signed up with the company plan, which has a $1,000 monthly premium, he’d owe $600 out of pocket each month.
‘‘When they explained that their plan cost more than [the $400] they’d be giving me, it changed things,’’ he says.
It cost $140 a month to add Burlingame to the family plan.
Human resources specialists say it is common for employers to offer incentives to influence such decisions. For example, if an employee’s spouse can get coverage through his or her own job, ‘‘some plans apply a penalty if they don’t take the coverage,’’ says J.D. Piro, at Aon Hewitt. ‘‘You could do that for the adult child, as well.’’
As long as guidelines are spelled out and applied consistently, a company can provide financial incentives; the company could even decide that someone was not eligible for its plan.
The question is, why would employers want to do that? Young people generally have fewer health problems and are relatively inexpensive to insure. In 2009, just 11.8 percent of adults age 19 to 29 had health expenses that exceeded $1,000, compared with 26.5 percent of those between 30 and 64, according to Young Invincibles, an advocacy group for young adults.
But a company that buys insurance for its workers and pays premiums based on the number of people in the plan, as many small companies do, might find it advantageous to cover fewer people.
A wrinkle in the 2010 health law might prevent some adult children from joining parents’ plan. Until 2014, plans that haven’t changed their benefits or costs since the law became effective — need not cover adult children if the child can buy health insurance at his or her own job.