When a relative of mine graduated from college about 20 years ago she wasn’t quite ready to face up to getting a job or going to graduate school. She’d saved some money and figured she could go on a cross country bike trip for a year instead. Sadly for her, her parents told her she couldn’t do that because she’d neglected to factor in the purchase of health insurance –which was more than she could comfortably afford. She ended up getting a job instead.
Today things would be different and her parents would have to come up with another line of argument to encourage adult responsibility. That’s because the Patient Protection and Affordable Care Act (PPACA) allows adult children to remain under their parents’ coverage up till age 26. That’s a boon for the jobless and for those with jobs that don’t provide coverage, especially because it’s usually pretty cheap to stay with mom and dad compared to going it alone in the individual market.
But this provision is also a potential help even to young adults with insurance –and their companies. Some employers have started to figure out that it can make sense to encourage employees to stick with their parents’ plans, even if it means providing financial incentives to do so. It’s not so different from employers who encourage their employees to go on their spouses’ plan. Small employers, in particular, can benefit because they can offload employees to larger employers who may have a better deal on insurance than the small employers can cut.
As a side benefit, young employees start to learn a bit about how the health insurance market works (and doesn’t work), and it makes it easier for small employers in particular to hire young workers.