Employers to pay 2% more to cover college kids

By Bruce Japsen
Posted July 14, 2010 at 7:55 a.m.

Employers could see an additional cost increase of up to 2 percent to medical premiums next year under the new health reform law that extends coverage to people up to age 26 through their parents’ health plans.

A new study by employee benefits consulting firm Mercer says the influx of “newly eligible” college-aged dependent children on their parents health plans will on average increase health care costs 0.25 percent to 2 percent. The increase would come on top of premiums for large employers already rising this year 8 to 10 percent by most analysts’ estimates.

The mandated provision of the health reform law that allows parents to keep children on their family insurance plan up to age 26 goes into effect Sept. 23 though employers and insurers can wait to comply with the mandate once the new benefit year starts, which is generally Jan. 1 for most large companies. It’s one of the early benefits of the landmark health reform legislation passed by Congress four months ago and signed into law by President Obama to bring coverage to 32 million uninsured Americans over the next four years.

Mercer’s data comes from a sampling of two million employees who work at 791 employers that range in size from fewer than 500 workers to more than 10,000 employees. Most of these companies that fund their own health plans will wait until Jan. 1 to comply with the mandate, Mercer said.

Though many supporters of health reform and say implementation makes sense because young adults are an easy group to cover given they use health care services very little compared to Baby Boomers and the elderly, Mercer said employers should plan now for the cost increases, even though they are minimal.

Young adults 19 to 29 represent the fastest-growing segment of the uninsured in the U.S. They lack coverage at a rate twice as high as that of adults 30 to 64, according to U.S. census figures. Some choose to gamble and go without insurance, while others struggle to pay premiums or work jobs just for the benefits, analysts say.

One thing Mercer and other benefits firms have advised is to do dependent audits to determine how many dependents there are and the demographics of companies’ workforces. “Find every dollar you can now to help minimize the likely cost spike that is just around the corner,” said Dan Priga, national business leader of Mercer’s performance audit group.

Many health insurance firms are already complying with the mandate ahead of the deadline for their state-regulated small group and individual health insurance businesses.

Trustmark Cos., for example, allowed graduating college students and certain other dependent children to stay on their parents’ health plans starting June 1. Other health insurance firms also are complying ahead of the deadline. Blue Cross and Blue Shield of Illinois, for example, implemented the change to cover graduating young adults effective May 1.


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  1. Florida Jim July 14, 2010 at 8:44 a.m.

    All the money spent on colleges should be accounted by audits every year because the cost of college has risen greatly disproportionately to the cost of most everything else.
    Professors who work 4 hours a week and write books,[Bill Ayers, Ward Churchill are two examples] give speeches, follow phony climate change grants and support the enormous scam, allow interns to conduct the class while they earn money elsewhere. All this is done while indoctrinating the students with a marxist left -wing agenda for which the country will pay forever.
    Now Obama has had bills passed to give students 2% more of our taxes instead of looking into my charges of gross mismanagement and very poor professorial oversight. Stop the spending, stop tenure, ban interns, provide both sides of every argument and run the college as a business with a profit you remain with a loss you either cut costs, expand your base or close!

  2. Chris July 14, 2010 at 12:23 pm

    You really don’t do anything other than complain, do you Florida Jim? I guess that is your life now…..hope you enjoy it..