When it’s time to get your own coverage, it’s important to know how to get a policy and understand the type of plan that will best fit your needs. Some plans offer more affordable premiums, while others pay more health care costs. But what’s most important is that you continue health insurance coverage, even if you’re young and healthy.
When You Will Lose Health Insurance Through Your Parents
The Affordable Care Act (ACA) mandated that children are covered by a parent’s health insurance plan until the child turns 26 if the parent’s health plan offers coverage for dependents. The rule applies to unmarried and married children and all types of health plans, including employer-sponsored coverage, according to the Department of Labor. The law also allows you to remain on a parent’s plan until age 26 if you:
Go to college or drop out of schoolAdopt or have a childMove out of your parents’ houseAre not claimed as a dependent on your parents’ tax returnsRefuse an offer of employer-sponsored health insurance
Some States Extend the Age Limit
Some states follow the ACA’s age-26 rule, but others have laws that allow you to remain on a parent’s health insurance policy longer—but only under certain conditions. Although the following states offer exceptions, health care laws are subject to repeal or revision.
Employer-Sponsored Health Insurance
Some employers offer group health insurance plans for their employees. With a group plan, the employer chooses the plan and often pays a portion of your premium. Some group plans may limit the doctors and hospitals from which you can seek services, and you may not be able to keep the same coverage when you go to work for another employer.
The Health Insurance Marketplace
The marketplace provides health insurance tailored for people who don’t get health insurance through an employer. Many marketplace participants receive subsidies that lower their premiums. You can research and buy marketplace coverage at HealthCare.gov or through your state’s marketplace. Marketplaces allow you to apply during “open enrollment” periods that typically run from Nov. 1 to Jan. 15.
COBRA
The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows workers who have employer-based health insurance to continue their benefits. COBRA coverage is only available following certain qualifying events such as job loss, reduction in work hours, death of the policyholder, or divorce from the policyholder. The ACA also dictates that COBRA coverage extends to dependent children up to their 26th birthday. Although COBRA can help bridge the gap if you lose your coverage, it often requires you to pay the entire premium out of pocket.
Medicaid
Federal and state governments work together to provide Medicaid, which is health insurance available to low-income adults, elderly adults, people with disabilities, children, and pregnant women. States administer Medicaid according to federal guidelines. Eligibility for Medicaid is based on your modified adjusted gross income. To qualify, you must hold U.S. citizenship or have a qualifying non-citizen status, such as permanent residency. Typically, you must be a resident in the state in which you apply for Medicaid.
School-Sponsored Health Insurance
Many colleges and universities offer health insurance policies to their students. A school-based plan might cost approximately $1,600 for one semester and $4,200 for the full year. Copayments can range from $30 for an office visit to $150 for an emergency room visit. Check with your school to find out what its plan covers.
Choosing the Type of Insurance Plan
Before shopping for your first health insurance policy, it’s important to know the types of plans available, the level of coverage you can expect, and associated costs. Below are some of the most common types of health insurance plans.
Exclusive Provider Organization (EPO)
With an EPO, the plan will only cover costs if you seek the services of doctors, hospitals, and services within the defined network, except when you need emergency care.
Health Maintenance Organization (HMO)
HMOs contract with doctors, sometimes within a specific service area, to provide care and preventive health services. This type of plan only covers the cost of services provided by in-network caregivers, except in emergencies.
Point of Service (POS)
With a POS, you pay less for physician and hospital care when you seek services with a network. To receive specialist care, you must obtain a referral from your primary care physician.
Preferred Provider Organization (PPO)
PPOs offer reduced-cost services when you seek care from doctors and hospitals within a network. This plan doesn’t require you to obtain a referral for specialist care.
Health Insurance Costs
Health insurance coverage requires you to pay a monthly premium. But you’ll also have to pay other costs when you need care.
Deductible
The deductible is the amount of money you must pay out of pocket before the policy starts covering costs. For example, if your annual deductible is $1,500, you must pay 100% of medical costs each year up to $1,500. Afterwhich, your insurance plan kicks in.
Copayments
Copays are fixed payments for certain services, such as urgent care, primary care, or a specialist visit. You pay before or after you meet your deductible, depending on the plan. For example, a plan may require you to pay a $20 copayment each time you visit your doctor.
Coinsurance
Coinsurance is a specific percentage of the cost of service that you must pay. Coinsurance can vary depending on the health plan. For example, if you have a plan with 80/20 coinsurance, you would pay 20%, and the insurer would pay 80% of medical costs. However, not all plans require you to pay coinsurance, but the plans that don’t might charge a higher monthly premium than the plans with coinsurance.
Out-of-Pocket Maximum
A health insurance plan may cap the amount of money you must pay for health care services each year.
For 2022, Marketplace insurance plans cap out-of-pocket costs at $8,700 for single coverage and $17,400 for family coverage. For 2023, Marketplace plans cap out-of-pocket costs at $9,100 for single coverage and $18,200 for family coverage.
Do Young People Really Need Health Insurance?
If you’re healthy, you might not think you need health insurance until you’re older. But consider this: Treatment for a broken leg can cost up to $7,500, and a hospital stay can cost $10,000 per day, according to the U.S. Centers for Medicare and Medicaid Services. If you don’t have health insurance, you’ll have to shoulder the entire cost of medical expenses if you sustain an injury or become ill. Also, consider the potential for future health problems. Federal law doesn’t allow ACA-compliant insurance plans to deny coverage for a preexisting condition such as diabetes or heart disease. Check with your employer since some companies offer employees group health insurance. The employer usually pays a portion of your premium, which might make it cheaper than buying a policy individually. Coverage from COBRA—Consolidated Omnibus Budget Reconciliation Act—often allows you to get insurance coverage on your parent’s employer’s plan beyond your 26th birthday, but the coverage may not last indefinitely.
