Congrats -- Now Don't Get Hurt

July 14, 2005

As graduates leave the stage and head for the wide world, they often do so without health insurance.

Some college health plans cover students for the summer after graduation. But, as recent graduates decide whether to travel, or take that first job, the clock on their coverage is ticking. In many cases, the coverage disappears as soon as they get their diploma. With a growing number of uncovered recent graduates, colleges and alumni associations are adopting various ways of offering health insurance. But these efforts are frequently limited by state regulations.

In Massachusetts, the nonprofit Tufts Health Plan (which is not part of Tufts University) began marketing GradCare, a comprehensive, one-year group health insurance plan, to colleges so that they could offer it to new alumni at affordable rates. The idea isn't for the college to pick up the insurance costs, but to help young graduates get decent rates through a group plan.

The state Division of Insurance, however, decided that, according to state law, recent graduates cannot be classified as a “group,” like corporate employees, for insurance purposes. “The product, in concept, is a good idea,” said Chris Goetcheus, spokesman for the division. “We’re well aware that new graduates that don’t have employment out of college are more apt to go without coverage. But it has to conform with the law.” At the behest of the Tufts Health Plan, the division is currently reviewing the decision, and hopes to have a determination in August.

Some institutions were already eager to use GradCare.

“It’s the first of its kind that we know of,” said Neil Buckley, vice president of finance and administration at Emmanuel College. “When we heard of it, we jumped at it.” Buckley said he thinks more and more students take a bit of time off after graduation, and, if they travel, “it can be especially risk,” he said. In Massachusetts, undergraduates are required to have some form of coverage, but “there’s a void out there for young grads,” Buckley said.

Only a very small number of institutions offer insurance to recent graduates, according to Stephen L. Beckley, a consultant who is an expert on student health programs. And some of that select group are reevaluating their programs because there have been too few customers and too many claims. Beckley added that, in many states, health insurance laws similar to those that prompted the recent Massachusetts ruling preclude recent graduates from getting a group policy. “They can’t qualify as a ‘group’ just for the purpose of getting insurance. There has to be a real association,” he said.

Insurance companies already worry about providing short-term coverage to recent graduates because those seeking coverage tend to be "people who know they are going to need it soon," said Wendy Morphew, a spokeswoman for Aetna, which offers insurances to undergraduates at many colleges. "The cost becomes prohibitive," she said.

Some alumni associations have taken to offering plans to members, and can sometimes qualify as a group by charging dues. GradMed, a plan offered through Fidelity Security Life Insurance Company, offers short term – 30 to 180 days – insurance through over 200 alumni associations to healthy young graduates. For recent alums living in Massachusetts, New York, New Jersey, or Vermont, however, neither GradMed nor any other short term plans are allowed. “I don’t think [recent graduates] have many options in those states,” said Janey Phillips, director of creative development for GradMed’s marketing department. “I really don’t understand the rationale, unless it’s to get them to rush out and get long term coverage. But that’s expensive.”

Still, Beckley said that might be a good idea. “They might be doing people a favor by inducing them to buy real health insurance,” he said. Beckley noted that many short-term plans are not subject to the same regulations as conventional plans, and may not provide maternity coverage, or prescription drug benefits in some cases. “Some of them are really bare bones, and can be very inadequate.” In any event, Beckley suggests that graduates don’t take too long a vacation from health coverage after graduation, because a 63-day lapse will force any ailments to be classified as preexisting conditions when they again apply for coverage.

As more and more states are requiring coverage for all undergraduates, some institutions are extending plans at least for a few months after graduation. Jim Mallison, director of the Student Health Center at the University of North Carolina at Charlotte, said that his institution extended coverage through the summer for recent graduates to give them a chance to find a new plan without having the lapse. “You don’t want that lapse,” he said, adding that he thinks plans like GradCare, if financially viable, “would be a great idea. I would go for it.”

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