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To the great disappointment of some Democratic lawmakers, President Joe Biden’s plan to boost the social safety net doesn’t include expanding Medicare coverage.
Some had hoped that Biden’s $1.8 trillion American Families Plan, the details for which were released last week, would include a measure to drop the qualifying age for Medicare down to 60 from 65.
But in at least one state, older adults without coverage may still be able to count on health care reform. A proposal to allow adults to add their parents to their health plans is now working its way through the legislature.
While this measure could widen access to affordable health insurance, it faces some major obstacles.
What’s being considered
California state assemblymember Miguel Santiago introduced the proposal to allow adult children to list their parents as dependents on their health care plans.
The Parent Healthcare Act would open up more affordable coverage to an additional 20,000 to 80,000 Californians, based on analysis by the California Health Benefits Review Program.
In a press conference announcing the bill, Insurance Commissioner Ricardo Lara says the legislation could save some families thousands of dollars a year.
For example, he says, in 2021, the maximum out-of-pocket limits for an individual plan can be a little more than $8,000, while the limits on family plans are around $17,000.
“Meaning a family with a parent who has major health costs could end up paying over $8,000 more because they’re not in the same family plan and must meet the individual and family out-of-pocket limits,” says Lara.
If passed into law, the measure, which went through its first committee hearing last week, would make California the only state that allows dependent parents onto adults’ health plans, according to the state’s Department of Insurance.
Who would benefit?
Assemblymember Miguel Santiago, who introduced the bill, says there are currently 3 million individuals who lack health care in the state.
With this measure, he aims to help provide affordable health coverage for both working families and elderly individuals who’ve either lost their jobs through the pandemic, are disabled or undocumented.
“Health care is probably the most important thing we can provide our loved ones,” Santiago says. “This is a step in the right direction to ensure that all Californians are covered under quality health care plans.”
While Lara says most families would be best served seeking coverage through Covered California, the state’s health care exchange — which offers the newly expanded Obamacare subsidies — that’s not an option for undocumented people.
Instead, adult children who care for and financially provide for their undocumented parents have to buy separate policies that include separate deductibles and out-of-pocket expenses.
He adds that many of those older adults who can’t afford coverage end up not buying a plan at all.
But then when they’re ill, they end up in the emergency room, which ends up costing the state three to four times more than providing coverage initially would.
“This will help a group of people who’ve fallen through our cracks,” Lara says.
What are the potential downsides?
While the bill’s passage could save individual families thousands of dollars, it could end up passing those costs along to employers.
In response to the proposal, business groups have raised the concern that adding thousands of older people to their large group plans will only increase their already high premiums costs.
Depending on how many people sign up, employer premiums could increase between $200 million and $800 million, according to multiple media reports.
And that could mean higher health care costs for everyone.
Some detractors also worry this would lead to parents cancelling plans they can afford just to join their children.
But the parents would have to meet the IRS’s definition of a dependent, meaning they rely on their children for at least half of their support to qualify for coverage.
The state may also expand Medicaid coverage later this year to adults 65 and over who are undocumented, which may end up being the preferable choice for many of these families as it would offer free coverage.
What to do now
If you’re one of the “sandwich generation” struggling to support both your dependent children and dependent parents, health care costs may only be one of the bills that are now piling up.
You have a few options to free up some space in your budget whether or not your state plans to adopt a health care plan like the Parent Healthcare Act.
Cut the cost of your debt. If you’ve been relying on your credit card to carry you through the pandemic, you’ll know it doesn’t take long for expensive interest to build up. Consolidate your debt into a single, lower interest loan to help ease the pressure and pay down what you owe sooner.
Slash your insurance premiums. Experts like the Insurance Information Institute will recommend you review at least three car insurance quotes before settling on a single offer. Shopping around for the best rate can save you more than $1,000 a year. And the same technique could also save you hundreds a month homeowners insurance.
Stretch your dollars. You can also use what you have more wisely. Sign up for an investing app that can turn your pennies into profits by simply investing your “spare change”. Or download a free browser extension that will scour the internet for better deals or coupons every time you shop online.