Temporary insurance plan can bridge insurance gap

You passed your finals and graduated from college with honors. Now comes the real test — finding a job.

The good news: The job market for college graduates is improving. Employers plan to increase hiring of college graduates by 13% this year, the biggest gain since 2001, according to the National Association of Colleges and Employers. Even English majors are finding work.



The bad news: Your new job may not include health insurance, at least not right away. Many company-provided insurance policies don't kick in until you've been on the job for a few months. And some small businesses don't provide any coverage for their employees.



Don't look to Mom and Dad for help. In most cases, you're only covered by your parents' policy until age 23, and even then you have to be a full-time student. Once you graduate, "You're on your own," says Elizabeth Jetton, a financial planner in Atlanta.



Many graduates don't inquire about benefits when offered their first job, Jetton says. They're already shocked at how much of their paycheck is consumed by taxes. "The very idea of money going to health insurance doesn't really have a whole lot of meaning to them unless something goes wrong."



But if things do go wrong, forgoing health insurance could imperil your financial future and your health. A catastrophic illness or accident "can absolutely bankrupt somebody in a year's time," Jetton says. And if you develop a serious illness while you're uninsured, you may not be able to get health insurance in the future.



Protecting yourself



Some ways to make sure you're covered in case of a medical emergency:



• Consider all your options. A growing number of employers now offer consumer-driven plans, which generally charge lower premiums in exchange for a high deductible. Employers may contribute some money toward the deductible, but workers often pay all or part. For example, if your plan's deductible is $2,000 a year, you may get an allowance of $1,000.



If you're healthy and don't need to take prescription drugs on a regular basis, a consumer-driven plan could save you money, Jetton says. But make sure you put some savings aside to cover your deductible, she adds. That's not always easy to do, because new graduates have many demands on their paychecks.



• Look into buying your own policy. If you have to wait a few months before you're eligible for insurance, consider buying a short-term policy from a private insurer. These plans typically offer coverage for six months to a year. They usually cover major accidents and illnesses but don't pay for preventive care, physicals or dental care.



Temporary insurance plans are "typically very easy and very affordable to get," says Bob Hurley, vice president of customer care for eHealthInsurance, an online site for private insurers.



The application process is less rigorous than it is for longer-term plans. You can usually obtain a policy by answering six or seven questions over the Internet, Hurley says. In many cases, you can get coverage the next day.



For a 22-year-old non-smoker, premiums range from about $100 a month for a policy with a $250 deductible to about $40 a month for a plan with a $2,500 deductible, according to eHealthInsurance.



Health care giant Humana offers a plan for college graduates who need coverage while they're looking for work. Premiums for the HumanaOne College Graduate Health Plan, which is available in eight states, are up to 43% lower than those for a standard insurance plan, the company says. Participants can continue coverage after 185 days without reapplying. For more information, go to www.humana-one.com.



How parents can help



While young and healthy workers can obtain catastrophic insurance relatively cheaply, many are still hard-pressed to pay the premiums and deductibles. That's where parents can help.



For example, if your child signs up for a consumer-driven health plan, you could agree to help cover the deductible, Jetton says.



And if your child has to wait a few months before employer-provided benefits are available, consider paying the premiums for temporary insurance coverage, Hurley says. "Don't let them go uninsured. You don't want to stay awake at night worrying about whether your child is covered for a catastrophe."