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Navigating medical care can be challenging at any age. It may be particularly more daunting for people in their late teens or 20’s who have never had to shop for medical insurance. Here’s how to navigate health insurance for young adults.
As a result of the Affordable Care Act, many young people are automatically covered by their family’s health insurance plan until their 26th birthday. But if parental insurance isn’t an option for you, finding the best plan takes a little homework.
You may think that you don’t even need health insurance, especially if you exercise, don’t have any chronic conditions, and don’t need prescription drugs.
But in some states, you have to pay hundreds of dollars in taxes for simply going without health insurance. And accidents or unexpected illness can happen to anyone, no matter how healthy you are. Hospital bills or other unexpected medical costs can reach ridiculous amounts of money – well into the tens of thousands of dollars.
So, have no fear. Just because a lot of young people don’t think about health insurance until turning 26, it doesn’t mean you’re without options.
Health Insurance for Students Over 18
Many colleges and universities offer healthcare plans for their students, including health insurance for 18-year-old freshmen as soon as they begin classes. If you’re working towards your degree, check your school’s website or contact student health services to find out the details of available student healthcare plans.
These programs are often fairly inexpensive and may even include vision and dental coverage. They can sometimes be discounted if you receive financial aid from your school.
Employer Health Insurance
If you have an employer that offers healthcare coverage, you can enroll at any age, even if you’re still eligible for your family’s insurance. Some employers offer multiple options with varying levels of coverage, which also means different price ranges. You can choose the plan that works best for you.
If you opt out of employer-sponsored coverage when you first start your job you’ll have to wait until the next open enrollment period to sign up for a plan, unless you need insurance because you turn 26 and can no longer be covered under your parents’ plan or otherwise qualify for special enrollment.
Online ACA Insurance Marketplaces and Healthcare
Enroll During Open Enrollment
Anyone can enroll in a healthcare plan on sites like HealthCare.com. Once again, you’ll have to sign up during the Open Enrollment Period which runs from November 1 – January 15 each year in most states. In some places, like California, Colorado and Washington, D.C., enrollment windows have been extended permanently and other states often issue extensions each year.
Enroll Because Your Current Plan Ended
If you lose your current health insurance plan through no fault of your own – such as losing your family’s or employer’s sponsored plan, you have a 60-day window to join new ACA insurance.
Buying insurance without price comparing your options can be pretty costly, so it’s a good idea to see if you qualify for one of the options listed below to save some money.
ACA Subsidies
If you do opt to purchase a full-featured ACA plan, check to see if you qualify for an Affordable Care Act (ACA) subsidy, also known as premium tax credits. The subsidies are part of the ACA program that helps people pay for their monthly health insurance premiums and can make healthcare coverage much more affordable.
To qualify for ACA subsidies, your minimum household income must be at least 100 or 139% of the poverty level, depending on whether your state expanded Medicaid. Incomes cannot exceed 400 percent of the poverty level. This is based on your estimated yearly income, so it’s quite possible to meet this level even if you work full-time for part of the year.
When you look at the income requirements, remember that the subsidies are based on the income of the entire household. If you are still a tax dependent, then your parents’ income would be included when the subsidy eligibility is calculated. If you file taxes on your own and are a tax household of one, then only your income will be counted.
If you are under 26 and remaining on your parents’ health plan but filing your own taxes, your income will be added to your parents’ income and the combined total will be used to determine subsidy eligibility for the whole family. The subsidy amounts will then be apportioned in each household’s tax return.
Medicaid
Another option for affordable healthcare is Medicaid, which is a government-run program designed to provide healthcare for low income individuals. Each state sets its own coverage guidelines. But at the very least, Medicaid thoroughly covers the basics like doctors appointments, lab services, and family planning.
Individual states also set their own requirements for Medicaid eligibility, but income is always a factor. Under the ACA, states were offered the option to expand Medicaid eligibility but some states rejected it, which has created a coverage gap for people with income below the poverty level. Like ACA subsidies, your income is typically used as a determinant for eligibility.
Catastrophic Health Insurance
If you’re comparing plans and feel that all of the monthly premiums are more than you want to or can afford to pay – but you do want to protect yourself in case of an emergency – then catastrophic health insurance may be the way to go. Catastrophic plans cover three primary care visits a year, which is typically more comprehensive in terms of routine care than similar bronze plans, and protect you from major hospital bills. And these plans are fully compliant with the ACA, so they cover pre-existing conditions and essential health benefits.
Catastrophic plans are exclusively for young people under the age of 30 or those who quality for hardship exemptions, and features lower monthly costs than typical health insurance plans. Catastrophic insurance always comes with a high deductible, meaning if you do have any medical bills, you’ll have to pay a high amount before any coverage starts.
It’s important to understand that although catastrophic plans are available through the health insurance exchange, premium subsidies cannot be used to cover any of the costs for these plans. So they are generally not a good option for people who qualify for premium subsidies.
Most people with catastrophic policies never reach their full deductible, which means they pay all of their medical expenses for the year out-of-pocket. Based on this, it might seem catastrophic policies are the best choice only for healthy people. But they may also be the most financially beneficial to people with chronic conditions. If you know you are going to meet your maximum out-of-pocket (MOOP) limit, the premiums plus the MOOP costs may still be lower than other plans. You have to look at the amounts for different plans and see what is best for you.
Overall, if you’re generally healthy and do not require any expensive emergency care, catastrophic insurance will still save you money (and give you peace of mind) over the course of the year since your monthly payment is lower than standard plans.
Short-Term Plans for People 25 and Under
As allowed by law, ACA plans can’t charge younger people anything less than a third of the pricing for older people. (With the exception of Massachusetts, New York and Vermont, which have different rules.) By contrast, short-term plans can give you a fair price based on your age. It’s important to note, however, that short-term plans are different than ACA plans because they do not have to cover pre-existing conditions, pregnancy or various other medical needs such as outpatient prescription drugs.
If you’re ever in a situation without health insurance, look into short-term health insurance. In some cases, you can be insured within a day of submitting your application and payment. Like catastrophic policies, short-term plans typically have low premiums and high deductibles. But they are not compliant with the ACA, and their coverage is not nearly as comprehensive in the event of a serious medical condition.
How Long Can You Stay on Short-Term Plans?
Unlike catastrophic insurance, short-term health insurance is meant to be temporary until you’re able to get coverage under a traditional plan. It’s available for up to 3 months with a 1-month extension. Unlike plans purchased through the Health Insurance Marketplace, short-term health insurance is not required to include the 10 essential health benefits outlined in the ACA, and it generally doesn’t cover preexisting conditions.
It’s important to note that short-term insurance does not have to follow the pre-existing condition coverage guarantee, so it may be difficult to get this kind of coverage if you do have a pre-existing condition like asthma or diabetes. Even if you do qualify, short-term insurance is usually presented as a fallback option for coverage, not the plan that you rely on for the entire year.
Compare Your Early 20s Insurance Choices
Whether you’re purchasing your own insurance because you want to help your parents save money, you feel you don’t have privacy on your parents’ health insurance, you’re kicked off the family plan, or for any other reason, you definitely have options. As a young person, It’s possible to get health insurance in low-cost ways.
Before joining a health insurance plan, you should research and compare choices so that you find a plan with the right price and level of coverage.
