Health insurance for the under-26 crowd

NEW YORK (CNNMoney.com) -- The federal government unveiled details this week about how people up to age 26 can get covered by their parents' health insurance policies, as part of the health care reform law.

Consumers now have details about how one of the law's most-buzzed about provisions will actually work -- and how much it will cost them.

Expanding health coverage to twentysomethings is welcome relief for an age group that accounts for the majority of uninsured Americans.

Roughly 30% of young adults up to age 26 have no health insurance at all. That's three times the rate of uninsured children, according to the Department of Health and Human Services.

HHS estimates that about 1.2 million young adults will elect to stay on a parent's health plan in 2011 as a result of the reform.

Here's what you need to know about the new regulations.

Who's covered: The law takes effect for insurance plans that already cover dependents, starting on or after Sept. 23, 2010.

Those plans will cover policyholders' children until age 26 -- even if those adult children no longer attend college, don't live with their parents and aren't dependents on a tax return.

Under-26 children who were previously dropped from dependent coverage will also be able to re-enroll as long as they don't have access to an employer-sponsored plan.

If an adult child has access to another employer-sponsored health plan, insurers can generally refuse coverage, but only until 2014.

Also, the re-enrollment option only applies to plans that already offer dependent coverage. If a company has such a plan, it must inform employees their children, who may have aged out of the plan, will be eligible again starting Jan. 1, 2011.

The policy applies to married and unmarried children, but does not extend to their spouses or children.

How much it will cost: Insurers must treat all dependents the same, regardless of age. That means that companies cannot jack up costs or limit coverage for the under-26 group.

Parents will face a 0.7% increase in insurance premiums, across the board, for adding dependents to their plans, according to HHS. That will rise by an additional 1% in 2012 and in 2013. "[E]ither ... stockholders or consumers" will shoulder that extra cost, HHS said in its report.

For those who enroll in the dependent coverage, the average policy will cost $3,380 for each dependent in 2011; $3,500 in 2012; and $3,690 in 2013, according to HHS's mid-range estimates. Those extra costs are tax-deductible.

How to get it: More than 65 health insurers have said they are now offering dependent coverage ahead of the September deadline.

But it's up to individual employers to decide when to offer the provision, and experts say most companies will opt to do that during open enrollment. That period typically happens in early fall.

For plan-years that start on or after Sept. 23, insurers must give qualifying young adults a 30-day window to enroll, according to HHS.