From the July 2007 issue of Investment Advisor • Subscribe!

Finding the Best Healthcare Options

The news about the cost of healthcare is scary for most Americans, but healthy young students probably think it's one of their lowest priorities. Nearly 40% of college graduates are uninsured at some time during their first year after graduation, according to the Commonwealth Fund. Many times, parents are not aware that their children are no longer covered under their plan. Do your clients know whether or not their children are covered?

Although Generation Y may believe they are perfectly healthy, stuff happens and, with their new-found independence, there comes a new-found responsibility. A good starting point is to help new graduates look at what they have and what they lack.

First question: Does their new employer even offer healthcare coverage? According to the Kaiser Institute, approximately 47% of America's small business owners provide no healthcare coverage.

If their employers offer coverage, when does it kick in? Some employers do not offer benefits immediately (it can take up to three months before benefits take effect). An interim solution should be discussed.

Next, discuss their healthcare coverage options. Their first reaction may be to take the cheapest alternative offered. As we know from personal experience, this may or may not be the best solution. Use your profiling skills to understand what their needs are and help them make a decision that will work both for their lifestyles and their finances.

Once they decide on their coverage, you will want to discuss flexible spending accounts. At a minimum, they should be contributing their deductible.

While you are on the subject of health, encourage the new grads to take full advantage of any employer-sponsored disability plans. Various studies have found that, by the age of 30, people have a one-in-three chance of being disabled for at least 32 months. Although this may seem far-fetched to these healthy young people, let them know that the loss of income can be very devastating: 46% percent of all home foreclosures are due to disability, according to the U.S. Department of Housing and Urban Development.

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