3433-vol. 6 issue 2-3.pmd - iarfc

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Journal of Personal Finance
usually to age 24, 25, or 26, as a response to the growing cost of caring for
those without insurance. Often, this coverage applies whether young adults
are attending school or not and, in some states, coverage even extends to
grandchildren if they are financially supported by, or in the legal custody of, a
grandparent with health benefits (McQueen, 2006; National Conference of
State Legislatures, 2007). Requirements for coverage vary from state to state.
Many state laws do not require a dependent to be enrolled in an educational
institution. The National Conference of State Legislatures’ Web site provides
a comprehensive list of state laws and proposed and pending legislation with
respect to dependent coverage (National Conference of State Legislatures,
2007).
Several state programs also help families obtain health insurance.
One is the State Children’s Health Insurance Program (SCHIP). States have
different eligibility requirements based on the number of family members and
total monthly income but, in general, uninsured children under the age of 19,
whose families earn up to $36,200 a year for a family of four are eligible. (For
some states, the income limit is higher.) For little or no cost, this insurance
pays for doctor visits, immunizations, hospitalizations, and emergency room
visits (U.S. Department of Health and Human Services, 2005). Some states
also have special programs for families with health insurance who face a large
financial burden due to catastrophic expenses that exceed the limits of their
coverage. Others have state high-risk pools that provide coverage to people
who are considered uninsurable in the private insurance market. The National
Association of State Comprehensive Health Insurance Plans’ Web site
(www.naschip.org) has a complete list of these state high-risk insurance
programs. Another health insurance resource, mentioned above, is the State
Health Insurance Assistance Program (SHIP) for older adults. SHIP offices
offer one-on-one assistance to Medicare recipients and their families via
telephone and face-to-face counseling sessions and public presentations.
The Financial Cost of Unhealthy Behaviors
One important way that health and personal finances are related is
the sheer out-of-pocket cost of unhealthy habits, such as smoking and
alcohol consumption. Smoking, for example, has three negative economic
impacts: the high cost of cigarettes themselves, health care costs associated
with resulting conditions (e.g., lung cancer and heart disease), and increased
costs for health and life insurance premiums for smokers. In states with high
cigarette taxes, the cost of a pack of cigarettes may be as high as $7 for some
brands, including sales taxes. A pack-a-day smoker could spend over $2,500
annually to support their habit. Not surprisingly, smoking has deleterious
financial effects. Zagorsky (2004) investigated the effect of smoking on an
individual’s financial situation using a national longitudinal data set. The
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