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COLLEGE INSURANCE RATES

April 25, 2009 -- The acceptance letters are in, decisions are being made and another horde of parents is getting ready to send children to college in the fall.

If you're part of that wave, here's an important item for the to-do list: make sure your child has the right kind of health insurance.

The task used to be fairly straightforward. Most group health plans have traditionally allowed dependent children to stay on a parent's policy until the age of 23 or, in some cases, 25, if the child is a full-time student.

That's still typically the case. But with so many people losing jobs and, in turn, health benefits, counting on employer-sponsored health insurance isn't the automatic default it once was -- as Rich Costigan knows all too well.

Costigan, a construction worker in Royal Oak, Mich., and his wife, Karen, have a son in college and a daughter who will start in the fall. The construction company Costigan worked for recently went out of business. He still has six months' worth of health benefits banked with his union, and he will be eligible for coverage for up to 18 months through Cobra after that.

But on the chance that Costigan might be out of work for an extended period, the couple is looking for alternatives for both children, including individual policies and the college-sponsored health plans at the students' colleges. Their son, Greg, goes to Wayne State University in Detroit. Their daughter, Kristin, plans to attend Grand Valley State University near Grand Rapids, Mich.

"We have a lot of research to do yet," Costigan said. "We're still trying to get our minds around the situation."

As the Costigans and countless other parents research their options, the main goal should be making sure a student has enough coverage to pay for a serious injury or sudden illness, according to Dr. James C. Turner, director of the University of Virginia's department of student health and president-elect of the American College Health Association.

"You don't want your child to run out of coverage, rack up medical debt and risk becoming uninsurable just when he or she is starting out in life," Turner said.

Because college-age people are young and most often healthy, they're likely to be tempted to fly without a medical safety net. That may be why 20 percent of traditional-age college students don't have health insurance, according to the Government Accountability Office. "The reality is, accidents and illnesses do happen, even to young people," said Denny Ebersole, an insurance broker in New Orleans and board member of the National Association of Health Underwriters.

So make sure your college student is protected from that youthful sense of immortality.

RECHECK BENEFITS: "Employers have been steadily scaling back dependent benefits to cut health care costs," said Steven DeRaleau, chief operating officer of HumanaOne, the division of Humana offering coverage for students and recent college graduates.

If you're lucky enough to have employer-sponsored insurance, your first step is to make sure you can keep a full-time student on your policy. Even some people who could last year might not be able to this year.

VERIFY COVERAGE: If you are covered under a network-style plan like a health maintenance organization or preferred provider organization, and if your child is attending school away from home, you'll need to ask some questions. This applies whether you have employer insurance or an individual policy.

Call the insurer to learn whether there are network-affiliated doctors and other health care providers close to your child's school. If not, ask whether out-of-network providers are at least partly covered by your plan and what percentage of their fees you'll be expected to pay. Finally, if your child needs specialized care while away, will he or she need to get a referral from a hometown physician, or can the student receive a referral from a physician near campus?

Because most plans cover out-of-network care in full in emergencies, parents can usually work out these details, especially because most colleges offer student health services that can help take care of routine medical needs. For students with a chronic illness, though, attending a college beyond the network coverage area may pose challenges.

THE BIG LOOPHOLE: Group health care policies that cover full-time students often come with a huge loophole, warns Sandy Praeger, the insurance commissioner of Kansas and chairwoman of the National Association of Insurance Commissioners' health insurance committee. If an injury or illness forces the student to take a leave from school or cut back on classes, some policies consider that student no longer full time and thus no longer eligible for coverage.

Starting this October, when the federal Michelle's Law goes into effect, all group insurance plans must cover students on medical leave for up to one year. The law is named for Michelle Morse, a student in New Hampshire who died of colon cancer in 2005. She had continued her full college course load throughout her treatment, so she could keep her health insurance.

Despite the new layer of protection, many insurance brokers and agents may still be unaware of Michelle's Law -- or pretend to be -- and may encourage you to buy additional coverage to protect against this loophole. This is something you probably will no longer need to do, Praeger said.

But you do want to ask exactly how your insurer defines "full-time student." You don't want your child to lose coverage because he or she happens to take a light load one term.

INDIVIDUAL POLICIES: If you don't have a group insurance option, you'll need to shop for an individual policy for your child. Because college students are usually young and healthy, premiums for fairly comprehensive coverage are relatively low.

And this is one actuarial category, according to Ebersole, in which plans with high annual deductibles are not significantly cheaper than traditional coverage. But there is at least one situation in which a high-deductible plan may be a good option for a student: if the family is already covered under a high-deductible policy that is linked to a tax-advantaged health savings account to pay out-of-pocket health expenses.

The Internal Revenue Service allows parents to use such accounts for a dependent full-time student. The extra tax break can make insuring your child under a high-deductible plan worthwhile, Ebersole said.

One place to look for such an individual policy is a Web site like eHealthInsurance.com.

COLLEGES' PLANS: More than half of all colleges offer their own health policies for students. But the provisions vary widely, so be cautious.

Some limit the number of doctor visits, prescription drug coverage and length of hospital stays. The maximum benefits on these plans can also be extremely low, like $2,500 per condition per year to $1 million per lifetime, according to the G.A.O.

"It varies from state to state and college to college," Praeger said. "Limited coverage is still better than no coverage, but it's important for parents to understand these limitations before they sign up."

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