Keep kids covered — with health insurance

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Kids need and deserve a few essentials to make sure they get the best start possible: food, clothing, shelter and a good education, of course. But they also need dental and medical care to ensure that they grow into healthy, productive adults.

Unfortunately, millions of children have no health insurance coverage and as a result don’t get the kind of health care they need.

In 2007, according to the Census Bureau, some 8.1 million children had no insurance in the United States.

Though free or low-cost health insurance is available to kids in the poorest families, it’s more difficult for parents with higher earnings to get coverage for their kids.

There are insurance options for …
  1. Low-income families.
  2. Higher earners.
  3. Newly jobless.

Low-income families

Most free or subsidized help is available to children whose parents earn slightly above the poverty level.

A program called the State Children’s Health Insurance Plan was created in 1997 to offer health insurance coverage for the children of low-income families. According to the Center on Budget and Policy Priorities, SCHIP was originally created as an adjunct to Medicaid.

In February, the Children’s Health Insurance Program Reauthorization Act of 2009 was signed into law. CHIPRA expanded eligibility and increased funding for the State Children’s Health Insurance Plan.

According to the Department of Health and Human Services and the CHIP statistical enrollment data system, in 2008 about 7.4 million kids were enrolled, up from around 7 million the previous year.

With the signing of the reauthorization act, regulators hope to enroll another 4 million kids in the program. Most of them are already eligible for the program but just haven’t signed up.

Eligibility varies from state to state but “most states cover people up to the range of 200 (percent) to 250 percent of the poverty level, which in 2009 is about $36,620 to $45,775 for a family of three,” says Sarah Lueck, policy analyst with the Center on Budget and Policy Priorities.

“But some states cover kids that are at less than that and some states go beyond 250 percent of poverty level,” she says.

Parents who have no health insurance for their kids should contact their state health insurance program to find out more about the eligibility requirements in their state.

Higher earners

For parents who earn too much to qualify for the free or low-cost state programs but still struggle to insure their children, finding a job with health insurance coverage is the ideal solution — but that’s not always an option. Many employers, particularly smaller ones, don’t offer health benefits.

In that event, the only other option is to buy an individual or family policy, at least until Congress comes up with a universal plan.

At the very least, children should have a major medical policy so that there is coverage in the event of a major illness or injury. And that goes for parents as well, says Certified Financial Planner Tracey Baker, author of “Navigating Your Health Benefits for Dummies.”

A policy that covers only major illness or injury won’t cover yearly checkups, but can serve as a safety net in the face of a calamity. Because they don’t cover ongoing wellness issues, these policies are generally much cheaper than full coverage, but can be a lifesaver in the event of an emergency.

Individual or family policies with high deductibles — the annual amount you must pay out-of-pocket before benefits kick in — are often cheapest and come with tax benefits. The IRS lets you invest money on a pre-tax basis in a health savings account that can be used to defray health care costs. To be eligible for an HSA, the deductible for individual plans must be at least $1,150 and no higher than $5,800; the deductible range for family coverage is $2,300 to $11,600.

As a stopgap measure, parents might consider getting coverage only for the kids. After all, if they’re not insured, it may not be wise to let them participate in school sports or even play outside, lest they get an injury that requires an emergency room visit or worse. On the other hand, restraining their physical activities could also adversely affect their health.

“For a family and people in good health, and you can even get plans for just children or young adults, they can even be more affordable as long as there are no health issues. In fact, plans for young children can be as little as $40 a month,” says Baker.

“And there are quite a few that are under $100 a month. That is important to get some coverage, certainly for their children. Take the time to look at individual health insurance,” she says.

When evaluating individual or family health plans, parents should take cost into consideration, but they shouldn’t rule out policies that may be slightly more expensive since they may offer many more benefits. That’s where a health insurance agent that specializes in individual policies can be very helpful.

For starters, check out the “Consumer Guides for Getting and Keeping Health Insurance,” written for each state by the Georgetown University Health Policy Institute.

The individual policy world has been mostly taken over by Web sites, according to Baker. As an example, InsureMe, a Bankrate company, offers online leads to health insurance brokers.

Newly jobless

For parents who just lost their jobs and with it, their health insurance, COBRA may be an option to explore.

Typically COBRA coverage is very expensive — it’s an extension of the coverage you had with your employer and is priced at that group rate. Because there are usually some less healthy workers thrown into the bunch, group coverage can be more expensive than an individual policy would be for healthy people.

However, as part of the stimulus bill signed earlier this year, COBRA was temporarily made more affordable.

Workers laid off between Sept. 1, 2008 and Dec. 31, 2009 who are eligible for COBRA will not have to pay the full premium for their first nine months on COBRA.

COBRA can be the best choice for individuals or family members of the insured who have pre-existing health conditions, particularly if they’re expensive conditions.

But if all your family members are healthy, it may be worthwhile looking into purchasing a health insurance policy on your own. A high-deductible individual or family plan coupled with a health savings account may serve as a temporary solution — at least until universal coverage becomes a reality.