Navigating medical care can be challenging at any age. It may be particularly daunting for people in their late teens or 20s who have never had to shop for medical insurance.
As a result of the Affordable Care Act, many young people can be covered by their family’s health insurance plan until their 26th birthday. But if parental insurance isn’t your option, 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 must pay hundreds of dollars in penalties for simply going without health insurance. And accidents or unexpected illnesses can happen to anyone, regardless of your health. Hospital bills or other unexpected medical costs can reach ridiculous amounts – well into the tens of thousands of dollars.
So, have no fear. Just because many 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 first-year students 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 inexpensive and may even include vision and dental coverage. They can sometimes be issued at a lower cost 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.
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 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 states, extensions are often issued 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 a 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 money.
If you purchase an ACA plan, check to see if you qualify for an Affordable Care Act (ACA) subsidy, also known as a premium tax credit. 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.
Your health insurance premium must not exceed 8.5% of your household income to qualify for ACA subsidies. Some incomes can exceed 400% of the poverty level and qualify for a subsidy. Since it is based on your estimated yearly income, it’s possible to meet this level even if you work full-time.
When you look at the income requirements, remember that the subsidies are based on the entire household’s income. If you are still a tax dependent, your parents’ income would be included when the subsidy eligibility is calculated. Only your income will be counted if you file taxes independently and are a tax household of one.
Suppose you are under 26 and remaining on your parents’ health plan but filing your taxes. In that case, 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.
Another affordable healthcare option is Medicaid, a government-run program designed to provide healthcare for low-income individuals. Each state sets its coverage guidelines. But at the very least, Medicaid thoroughly covers the basics, like doctor appointments, lab services, and family planning.
Individual states also set their requirements for Medicaid eligibility, but income is always a factor. Under the ACA, states were offered the option to expand Medicaid eligibility. Still, 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 want to protect yourself in an emergency – catastrophic health insurance may be the way to go. Catastrophic plans cover three primary care visits yearly, are typically more comprehensive in routine care than similar bronze plans, and protect you from significant hospital bills. These plans fully comply with the ACA, covering pre-existing conditions and essential health benefits.
Catastrophic plans are exclusively for young people under 30 or those who qualify for hardship exemptions and feature lower monthly costs than typical health insurance plans. Catastrophic insurance always comes with a high deductible, meaning if you 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 these plans’ costs. 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, meaning they pay all their medical expenses for the year out-of-pocket. Based on this, catastrophic policies might seem to be the best choice for healthy people. But they may also benefit people with chronic conditions most financially. If you know you will 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, suppose you’re generally healthy and do not require any expensive emergency care. In that case, catastrophic insurance will save you money (and give you peace of mind) over the year since your monthly payment is lower than standard plans.
Short-Term Medical Plans for People 25 and Under
As the law allows, ACA plans can’t charge younger people anything less than a third of the pricing for older people. (Except Massachusetts, New York, and Vermont, which have different rules.) Alternatively, short-term medical insurance plans can give you a fair price based on age. It’s important to note, however, that short-term medical plans differ from ACA plans because they do not have to cover pre-existing conditions, pregnancy, or other medical needs such as outpatient prescription drugs.
If you’re ever without health insurance, you might want to consider short-term medical coverage. Sometimes, you can be insured within a day of submitting your application and payment. Like catastrophic policies, short-term medical plans typically have low premiums and high deductibles. However, they are not compliant with the ACA, and their coverage is not nearly as comprehensive in the event of a severe medical condition.
How Long Can You Stay on Short-Term Medical Plans?
Unlike catastrophic insurance, short-term plans are often not designed for permanent coverage. As of 2023, your plan can last between 30 and 364 days, and if necessary, you can re-apply for another renewal after the plan has expired in certain states. Remember, your insurer can deny re-application and recommend you move to an ACA plan if you’ve developed a severe illness. However, be mindful that short-term medical plan non-renewal does not qualify for a particular enrollment period for an ACA plan, and you could be without coverage for a time.
It’s important to note that short-term medical does not have to follow the ACA pre-existing condition coverage guarantee, so getting this kind of coverage may be challenging if you have a pre-existing condition like asthma or diabetes. Even if you qualify, short-term medical is usually presented as a fallback option for coverage, not the plan you rely on for the entire year.
Compare Your Early 20s Insurance Choices.
Whether you’re purchasing your insurance 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 have options. As a young person, getting health insurance in low-cost ways is possible.
Before joining a health insurance plan, you should research and compare choices to find a plan with the right price and level of coverage. Feel free to call a health insurance agent via Healthcare.com, who will give you extra help with the process.