NCPA - National Center for Policy Analysis

Young Adults on Parents' Health Plans Cost More

April 16, 2013

Under the Affordable Care Act, children up to the age of 26 years can stay on their parents' health insurance plan. While the expansion of coverage is good for these children, they are incurring higher health costs than young adults who have their own coverage, says the Wall Street Journal.

  • New research suggests that costs are higher because children on their parents' coverage used the insurance for higher amounts of mental health, substance abuse and pregnancy care.
  • Millions of young adults have signed up to be covered under their parents' plans.
  • Under the law, employers must allow parents to sign up their children and the cost must not exceed that of a family plan.

The provision has garnered wide support, even from some Republicans, though the costs of the provision have been the subject of debate. The provision increased the eligible age by three years for those in school full time and seven years for those not in school.

  • Some insurance industry mangers say that private plans can absorb the cost of the additional youth because the participants will pay a higher fee for longer.
  • One insurance company says that costs increase around $200 a month for each enrollee.

The Employee Benefits Research Institute (EBRI) examined one company after 700 young adult dependents signed onto their parents' plans in 2011.

  • EBRI's research found that newly enrolled young adults incurred $2,866 in health costs on average. This number was 15 percent higher than the 13,000 young adults who had their own coverage through the company.
  • The young adults with their own coverage averaged $2,472 for health services.
  • Consulting firm Mercer found similar results and estimated the average cost of coverage at $1,600 to $2,400, which added about 2 percent to costs.
  • The EBRI study noted that the 700 young adults cost about $2 million more, but that the added expense added only 0.2 percent to total costs.

Source: Louise Radnosfky, "Young Adults on Parents' Health Plans Cost More," Wall Street Journal, April 11, 2013.


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