Empty Nesters
Taking a Second Look at Your Benefit Plan
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With the kids off to college, life seems a little different these days. During this period full of conflicting emotions, taking time to review your financial plan might seem like the last thing on your list of to-dos. However, the transitional time provides a perfect opportunity to get your health benefits and financial plan — including retirement — in order.
For example, don't forget about health care planning as your children are packing up their boxes to head to college. Eligible dependent children are typically covered until age 19, except for full-time students who are usually covered until age 23. Some employers may choose to extend coverage for full-time students beyond age 23. It is important to check with your employer on providing proper documentation for continued coverage. Half of all full-time students (ages 19-23) are covered under their parents' employer-sponsored plans, and 18 percent have individual coverage.
When your child goes off to college, it is important to know there are several health benefit options. You can keep your college student on your own plan, look into student health insurance options or enroll him or her in the college's plan, if available. Be careful to read the fine print, especially the exclusions.
Most universities will send you a bill for health insurance that is available through the school. However, if you prefer to keep your child on your policy, you should contact the university before classes begin to sign a waiver. After you sign the waiver, the university will not send you a bill, avoiding overpayment.
Other issues for parents to keep in mind with your child off to college:
- Make use of education tax breaks
- Be conservative with your savings
- Consider transferring investments to your child's name to save taxes
- Prepare a realistic school budget for your child and yourself
- Work with your child to minimize how much he/she uses a credit card
- Encourage your child to work while in school
- Consider liquidating assets to increase cash flow available for school expenses
- Continue saving for retirement
Once your child graduates from college, health benefits should be considered:
- Health insurance will be one of your first concerns, since your child will likely be dropped from your health coverage upon graduation.
- Once your child finds a job, health coverage will probably be provided, but it may not kick in for a few months.
- Your child may also take a few months to find a job. In the meantime, consider buying short-term health insurance. These plans can be pretty reasonable, especially if your child is young and healthy.
- Some colleges also offer temporary coverage for recent graduates.
