Weighing options: How college graduates should handle their health insurance

By Raleigh Rollins 

As Hilton Beck prepares for his upcoming graduation from the University of Georgia, he knows he will be confronting some significant financial decisions.

As a risk management major, he said he is well aware of the weight of one of the decisions that must be made.

“I’m still on my parent’s (health insurance plan), and I’m going to have to make this decision soon: whether to switch to the company I’m working for after college or to stay on my parent’s until I’m 26,” he said.

The age limit Beck referenced is due to the passage of the Affordable Care Act, which allows children to remain on their parent’s health insurance plan until the age of 26. Considering the average age of college students rests firmly in the early 20s, this is an especially timely decision that often must be considered soon after graduation.

The first thing most consumers consider when making any financial decision is cost, and healthcare and related insurance coverage is certainly not inexpensive.

David McCarthy, an assistant professor in the Terry College of Business at UGA, said the high expense for healthcare in the United States is due to many variables. These include higher wages for doctors and nurses and higher development costs for new drugs, treatments, and technologies.

However, the primary reason, he contends, is that healthcare is simply expensive by nature.

“By definition, you can’t mass produce (healthcare). What makes things cheap is the ability to produce things in standardized units,” McCarthy said, but “healthcare has to be individually tailored to you, it cannot be mass produced.”

Because of this, many companies offer employees health insurance, which is why McCarthy said health insurance is a decision that is dependent on “individual circumstances.”

If offered health insurance through one’s employment, McCarthy recommended that young adults “should compare premiums from that health care with the premiums that your parent’s pay on your behalf.”

Beck understands he will have to weigh his options before he comes to a final decision. “It’s really just seeing how much of a percentage of premiums or deductibles each plan pays” he said, “What it really boils down to what’s the cheapest for you.”

Of course, there are situations where graduating students are not offered health insurance through employment. According to McCarthy, this is often the case for those who are employed by smaller companies or non-profits. For graduating students in this situation, McCarthy sees three options.

The first is to remain on their parents’ plan, which, can only be done until he or she turns 26 years old. The second is to seek out health insurance provided by the government through, an affordable option which can be attractive for employed persons who have recently graduated.

“In general, because you’re young, those plans might be reasonably affordable,” he said, “and that may well be a better deal for you than staying on your parent’s plan.”

The third option is to remain uninsured, but this is not one McCarthy would recommend. He recognized this is attractive to many young people, but he argued that the risk outweighs any cost of insurance.

“You have to worry about if something bad happens, it may be very expensive,” McCarthy said, “As a healthy young person (the risk) is probably very small, but it is not zero.”


Raleigh Rollins is a journalism student at the University of Georgia.

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