FAQ: The Best Health Insurance Guide For Young Adults
When can I sign up?
The so-called “open enrollment” period, during which anyone can sign-up for or change health insurance plans, is between November 1st and January 31st. However, young adults who are about to get off their parents policy can sign up during special enrollment which is available after open enrollment.
If you get health insurance through your employer, this is the time anybody can make changes to their health insurance plan.
But you can make changes to your plan—or purchase your own coverage—at other times after a “qualifying life event”. These include a change in employment status, marriage, divorce, or having a baby.
Under the Affordable Care Act, do I have to get health insurance?
Yes. Any American who doesn’t have health insurance has to pay a tax penalty.
Health insurance can be provided through your job, your parents’ plan, COBRA, Medicaid or the VA, or a policy you purchase on your own.
Isn’t it just cheaper to pay the penalty?
When the ACA was first announced, maybe. But the penalty for not having health insurance has gone up since. In 2015, the penalty was $325 per person, or 2 percent of your household income, whichever is higher. In 2016, the fee was $695 or 2.5 percent of your income — whichever is higher.
Although it may be tempting to save money and simply pay the penalty — the risks are extreme. Young adults are typically healthy, but an accident or unexpected illness could leave you with six-figure medical debt and derail your entire financial future.
Some reports have emerged that under the Trump Administration, the IRS won’t reject returns for failing to include proof of health insurance coverage. That’s led some taxpayers to consider not paying the health insurance penalty under the assumption that Obamacare—or at least the individual mandate—will be repealed. Even if that happens, however, the mandate was still law for 2016, which means failing to pay the penalty if you didn’t have health insurance could put you at risk of tax-related fines or criminal charges.
Going forward—with or without a mandate—going without health insurance is a risky bet. Given the costs of a single health incident can quickly climb into five-figure territory, it’s not just health insurance, it’s wealth insurance. Whether such medical bills would drain your bank account or simply create insurmountable debts, health insurance is there to make sure you can recover both physically and financially from an illness or accident.
But I can stay on my parents’ plan until I’m 26, right?
Yes. Young adults can stay on their parents’ health insurance plans until age 26. This is true even if you don’t live with them or are on your own financially — and even if you’re married.
If you are under 26 and offered health insurance through your employer, you have the choice to get coverage through work or via your parents’ plan.
My employer doesn’t offer health insurance — how do I buy a policy on my own?
You have the option of purchasing a policy through the federal health insurance Marketplace or through an independent local or online broker like Policygenius. However you feel about the Affordable Care Act, the fact that you can now compare health insurance plans and buy them online is a very good thing. A few years ago, it simply wasn’t possible.
What’s the cheapest health insurance I can get?
Your state’s healthcare exchange offers different levels of coverage (Bronze, Silver, and Gold), but you may find that even the Bronze plan is quite expensive.
Adults under 30 and people with certain “hardship exemptions” may purchase a lower-cost catastrophic plan.
Most catastrophic health insurance plans require you to pay ALL of your healthcare expenses up to a certain amount (your deductible). The catastrophic plans offered through the federal health insurance Marketplace, however, cover three primary care visits per year at no cost and certain free preventative services. Short-term health insurance plans are them most affordable plans and provide great coverage if you are healthy.
The health insurance offered through my employer is still expensive; can I purchase different coverage on my own?
Yes. You can purchase health insurance through the federal Marketplace or elsewhere even if your employer offers health insurance. Keep in mind, however, that you may not quality for certain discounts and tax credits on a Marketplace plan.
Open Enrollment is the time to explore whether buying health insurance on your own could be cheaper than the plans you are offered at work.
How can I compare different health insurance plans ‘apples-to-apples’?
It’s not easy, but you want to look at three things:
How much you’ll pay in monthly premiums
How much you’ll pay out-of-pocket for routine healthcare (e.g., office visits and prescriptions)
If you get sick or injured, how much you COULD have to pay out-of-pocket before your insurance kicks in
Understanding health insurance terms – deductible, copay, co-insurance and annual out-of-pocket maximum – will make these comparisons easier.
Source data according to Money Under 30: FAQ: The Young Adult’s Guide To Affordable Health Insurance, 2018