No one knows what the future lies. It’s the main reason why active, healthy, and young adults are encouraged to invest in health insurance. Should an unexpected situation take place, a health insurance plan won’t only give them the medical treatment they need immediately but also a financial cushion.
Investing in health insurance earlier can give young adults cost savings as well. The earlier they invest, the smaller their premiums. However, if you’re cash-strapped, there are still several much more affordable options for you here. Check them out here.
Parent’s Health Plans
Staying on a parent’s health insurance plan is one of the ways young adults can find affordable health insurance. In some states, the Affordable Care Act (ACA) lets parents keep kids on their coverage until they’re 26 or even longer. However, a person might encounter major life events where existing insurance policy is no longer the right fit but you can change after enrollment.
Additionally, here are other reasons why young adults should remain on their parent’s health insurance:
- Since they’re not adding coverage, the health insurance costs don’t increase;
- If they’ve already had health care services this year, those funds had already gone toward the annual deductibles. Shifting plans within the year could mean starting at zero with a new health plan.
- Remaining on the same plans as their parents’ could mean they’re assured that their providers will take their parents’ health plan. Shifting plans could also mean they have to check to ensure their providers are on that plan’s network.
Young adults don’t have to be single and live at their parent’s house to stay on their parent’s health plans. They can still follow their parents’ plans even if they live elsewhere, are already married, and have children.
Employer-Sponsored Health Insurance
If young adults are working full-time, they should opt for their employer-sponsored health insurance. It’s more affordable than an individual health plan. Employers will help young adults pay for their health coverage and other medical expenses.
For example, for a single person, an individual health insurance plan’s average annual premium cost was around $7,911, while an employer’s health insurance plan was $7,873. Although both have almost the same costs, the latter will be split between an employer and employee by at least 50%. That’s why employer-sponsored health insurance is much more affordable.
Moreover, here are other reasons why young adults should opt for employers’ health plans:
- A no-cost or low-cost employer-sponsored health insurance plan may cost less than staying on their parent’s health plan.
- If young adults prefer not to let their parents know about their healthcare needs, having their health plans lets them maintain privacy.
However, to be clear, no federal law mandates companies of any size to pay for the health care coverage of their employees. It’s legal for them to refuse to offer it. However, employers voluntarily opt to offer benefits to their workers to avoid the penalties imposed by the Affordable Care Act (ACA).
Under the ACA, employers have shared responsibilities in improving healthcare availability, quality, and affordability in the United States. Hence, “large firms” or those with 200 or more employees should pay at least half of their workers’ health insurance premiums. Otherwise, they’ll have to pay a penalty of around $2,750 for each full-time employee or its part-time equivalent.
Another health plan young adults can rely on is Medicaid. It shouldn’t be confused with Medicare. Medicare is a federal program that provides health coverage to seniors, the disabled, and people with ERD (end-stage renal disease). In contrast, Medicaid is a state and federal program that offers health coverage if you have a meager income.
Medicaid can offer young adults no-cost or low-cost comprehensive health coverage if they qualify. It mainly bases coverage and costs on income. Additionally, it may offer more coverage than other plans.
Catastrophic Health Insurance
Young adults, usually under 30, can get a catastrophic health insurance plan. While it has the same benefits as standard ACA health insurance plans, it has much higher deductibles and much lower premiums.
In addition, deductibles work differently in a catastrophic health plan compared to a standard plan. In a catastrophic health plan, the insurer picks up the remaining out-of-pocket costs for the year after deductibles are reached.
Conversely, standard health insurance usually has a coinsurance portion when the insured and insurer split costs after reaching the annual deductible. The insured must pay it until they reach the annual out-of-pocket maximum, which happens when insurers start collecting healthcare costs for the year.
Short-term Health Insurance
Short-term health insurance is a low-cost plan that is an option in most states. It’s meant to fill gaps in coverage temporarily. Hence, it usually offers limited benefits. It doesn’t cover mental health, prescription drugs, and maternity care. In other words, it has high out-of-pocket costs.
Short-term plans are typically used as an affordable alternative to Consolidated Omnibus Budget Reconciliation Act (COBRA) insurance. If someone gets laid off, COBRA can extend employer-sponsored health insurance.
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How to Compare Health Insurance Plans?
The first step is to figure out eligibility for an insurance plan. For example, it may be possible to stay on a parent’s health insurance plan, but it may require an ACA plan or access to coverage via an employer.
Then, choose a benefit design. There are several kinds, such as:
- Preferred provider organization (PPO);
- Health maintenance organization (HMO);
- Exclusive provider organization (EPO); or
- Point of service (POS ) plans.
Each of them varies on the requirement for primary care physician (PCP), out-of-network coverage, specialist referral, and costs. Research them and know how much freedom you want in your health plan.
Next is to determine the costs. Prioritize knowing about premium vs. out-of-pocket cost, coinsurance, and out-of-pocket maximum vs deductible. For example, a high-deductible plan is a good option for healthy, low-risk young adults. They’re less likely to have high medical costs, so they spend less on monthly bills.
However, an out-of-pocket maximum with a low deductible can save costs for those with significant medical needs. While the premiums are higher each month, it can help you pay less overall.
While young adults may not need health care as much as the elderly, diseases and accidents come most unexpectedly. Regardless of age, health insurance plays a crucial role in optimal health and financial stability.