What to do about health insurance for college students

Q: My daughter will start college in a few weeks and I'm wondering what I need to do about health insurance for her.

A: Even though most children can stay on their parents' policies while they're full-time students, find out what coverage the policy will provide if she's moving out of town.

If you have an HMO that lets you use doctors and hospitals only in your area, your child could end up with big expenses for any visits to a doctor or hospital while away at school. College health-insurance policies are one alternative, but be careful before signing up. Some policies have low deductibles but also very low coverage maximums - as little as $50,000 per accident or illness, with limits of just a few thousand dollars for each kind of surgery or care. That could leave you and your child with tens of thousands of dollars in uninsured expenses.

If your daughter is healthy, she may do better to buy her own policy. Premiums for healthy people in their late teens and early twenties run as little as $50 to $100 per month in most states.

She could save even more money by buying a policy that has a high deductible - and high coverage limits - which will protect her against major medical expenses. Many high-deductible policies now cover preventive care, which may be all she needs if she's healthy. And if her policy has a deductible of at least $1,150, she can open a health savings account and make a tax-deductible contribution of up to $3,000 in 2009, which she can use tax-free for medical expenses in any year.

Most college students are unlikely to have an extra $3,000, but you could give her the money to contribute to the account. That would help her build up a stash to cover deductibles and co-payments in the future, when she may have more medical expenses.