Are you ready for the real world?

With more than 1.4 million members of the class of graduating this year, many parents and college grads are gearing up to celebrate. However, there may be unexpected costs during this transition into “the real world.” In fact, many college graduates are unprepared for the cost of health benefits since less than half (45 percent) will have jobs at the time they graduate. While getting that first job increases financial stability and access to employer-sponsored health benefits, not all employers provide health insurance, or there may be a waiting period to receive benefits at a new job. As a result, many parents may find themselves chipping in for health care costs until their child becomes part of the working world. Plan for Your Health, a public education program by Aetna and the Financial Planning Association (FPA), conducted a national survey of parents of upcoming and recent college graduates to gauge their knowledge and concerns regarding their child’s health insurance during this important transition period. These survey findings are especially relevant since 36 percent of young adults between the ages of 21 to 24 are uninsured, making them the leading uninsured age group among non-elderly adults. Top survey findings include: 1. After college, many graduates are no longer eligible as dependents under their parents’ health insurance plan. This survey found that parents want to be supportive but don’t know enough about their health coverage and are not taking the time to learn about it. In fact, 83 percent of parents of an upcoming graduate say their child will not be covered by their health insurance policy, or they don’t know their provider’s rules concerning college graduates. More than a third of these parents (37 percent) have spent no time researching or discussing health insurance. 2. Most parents are waiting until after graduation to discuss health insurance. For example, parents of recent graduates are three times as likely to spend two or more hours researching health insurance coverage for their child than those whose child has not yet graduated. Planning ahead is key in making sure college graduates have the health coverage they need. In most cases, advance research and planning can prevent confusion and difficulties down the road. 3. Nearly half of the parents surveyed (49 percent) think their child’s future or current employer will be responsible for paying for their college graduate’s health benefits. However, 55 percent of college students will not have jobs by the time they graduate. In this case, grads who are under their family’s plan are eligible for COBRA coverage for a maximum of 36 months. COBRA (Consolidated Omnibus Budget Reconciliation Act of 1986) is a law that permits individuals to continue coverage temporarily when they would otherwise lose eligibility due to a loss of employment or a change in family status. Graduates who have an individual policy through their college or university are not eligible for COBRA and should look into purchasing a health insurance policy. 4. While more than half the parents surveyed (55 percent) say that they are very familiar with the rules and policies affecting how long their child is covered under their health insurance policy after college, many say they would have questions about obtaining health insurance for their graduate in some common post-grad situations, such as not receiving benefits from an employer (67 percent), or if their child were unemployed (66 percent) or going to graduate school (57 percent). 5. In order to help advise their children, parents must have the appropriate information — and, according to this survey, many parents feel like they are in the dark when it comes to their child’s health benefits after graduation. Many parents (40 percent) feel that they do not have all the tools and resources they need to help their children make informed choices about health benefits after college. Almost all (95 percent) parents who don’t have the tools and resources said that if they had this information they would play a more active role in this important decision. Tips for parents By doing your homework, you can help take the guesswork out of an important topic that can impact your child’s health and your family’s wallet. • Money talk: If your college grad is in need of a financial reality check, make sure they understand the connection between their paycheck and their health benefits. Even though they may be in perfect health, accidents happen and medical bills can pile up quickly without the added protection of health benefits. • Health benefits 101: You may still need to write some checks to support your recent grad’s living expenses, but it’s never too early to introduce them to the role health benefits play in their financial future. First, know the facts. Find out how long after graduation your son or daughter can remain under your health insurance plan. Be aware of new or pending legislation in some states that will require insurance providers to offer coverage to older, unmarried dependents (up to the age of 30 in some states) regardless of whether or not they are enrolled in college or graduate school. • First job? After investing all that money in a college education, you and your graduate probably have high hopes for a great first job. Make sure that a job offer is as good as it sounds by checking out the benefits package. Look at the total compensation package, which can be a deciding factor between competing job offers. • Read the fine print: Even if their new employer offers health benefits, your child’s coverage may not begin immediately. Check out various health insurance options and be aware of the waiting period before benefits are available. Confused by the terminology? A number of good resources are available.