Adult Children Living At Home Are They Covered?

With a tough job market, many parents are welcoming back grown children who they thought had left the nest for good. Here’s how to make sure they have the right auto, home and health-insurance coverage when they move back in with you.

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Auto insurance. If your child just graduated from college and doesn’t have their own car, then your auto-insurance coverage may change very little. If you had been getting a discount because your child was living more than 100 miles away while at college, just let your insurer know that they have moved back home. The discount will disappear, but your child won’t need to get a new policy, and they’ll have coverage when they drive any of the family cars.

If your child has their own car, then they should have their own policy.

Home insurance. Your homeowners insurance policy will cover your childs stuff while they are in your house. But if they have any valuable items — such as an expensive computer system or other fancy electronic equipment — make sure your policy provides enough coverage. Contact your agent or insurer about your overall coverage limits or buy extra coverage for specific items. Most insurers limit coverage on certain types of valuables, such as jewelry, to just a few thousand dollars, but you can usually add extra coverage.

Health insurance. The health-care-reform law requires insurers to let adult children up to age 26 stay on their parents’ policies, which can be a big help for kids who have a tough time finding a job with benefits. In most cases, this extra coverage won’t take effect until January 1. But some insurers are letting recent grads stay on their parents’ policies before the law officially kicks in.

If you have health insurance through your employer, you should be given the option during open-enrollment season this fall to sign up children younger than 26 for coverage under your policy in 2011.

If an adult child has a job with benefits but loses that job after open-enrollment season, then they can be added to his parents’ policy — even if they are eligible to keep the coverage from his previous job through COBRA.

You may not have to pay extra to add your child to your policy if you already have a family policy to cover younger siblings. If you do have to pay extra, however, compare the additional cost to the price of your adult child buying their own policy. Most healthy people in their twenties can find individual health insurance for reasonable pricing. You can lower the premiums by raising the deductible, yet still have coverage for major expenses.

Either way, you may need to find other coverage until you can add children to your policy on January 1 — and you’ll need to find alternatives if children are older than 26. A child options depend on current health and coverage. If they are healthy, they could buy a low-cost individual policy and then decide whether to keep it past January 1 or switch to coverage under your plan. If they have health issues and has COBRA coverage from a previous job, they could keep that coverage for up to 18 months (although the price may be quite steep). If they have been uninsured for at least six months, they can sign up for coverage under the new high-risk pool. See www.healthcare.gov for details and more options.