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Insurance for 20-Somethings under the Affordable Care Act

Insurance for 20-Somethings under the Affordable Care Act

Americans have a lot to consider when it comes to health insurance —plan affordability, access to benefits, the amount of coverage needed. However, 20-somethings tend to carry a particularly heavy burden. They often start out in low-paying positions. Student loans, rent, car payments and daily living expenses tend compete for their limited financial resources. If they do not secure a job with benefits, health insurance can seem out of reach and being young and healthy can make it seem less risky to be uninsured.

The Affordable Care Act claims to give young adults greater control over their health care. While the Obamacare may have many benefits for millennials seeking health insurance, it has also dredged up new concerns and considerations.

Expanded dependent coverage, possibilities

In the past, young adults graduating from college, as well as those finishing high school and directly entering the workforce, needed to obtain their own health insurance almost immediately upon receiving a diploma. This often placed tremendous anxiety on 20-somethings who could not afford coverage while starting out on their own.

One of the new law’s earliest provisions, which went into effect September 23, 2010, allows dependents to stay on their parents’ health insurance plans until age 26, regardless of whether or not they live at home, attend school, get married or achieve financial independence. Starting in 2014, they can even stay on a parent’s plan despite access to employer-sponsored health insurance. As of December 2011, an estimated 2.5 additional young adults age 19 through 25 gained health insurance due to this provision.

Some speculate this has could influence life choices. Robyn Jordan, a 2007 graduate of Indiana University’s Bloomington campus, found herself without insurance after the 2008 Writers Guild Strike put her on hiatus. She began looking for work, primarily because she needed insurance.

“If I was able to stay on my parents insurance until I turned 26, I'm sure I would have taken more risks in my career choice,” Jordan said. “I may have thought more about freelancing or temporary jobs that would have been more beneficial in my ultimate career goals then the entry level job that I did eventually take.”

Jill M. Klingner, assistant professor of Healthcare and Operations Management at University of Minnesota Duluth said this provision’s benefits should impact young adults as well as the insurance marketplace.

“[The Affordable Care Act] allows young people staring out to be creative with career choices,” Klingner said. “They are young and healthy, so they should add healthy insured to balance the currently insured.”

Young invincibles, affordability, rate shock

For years it’s been said young adults forego coverage because they believe they are healthy, sobuying health insurance is a waste of their limited funds. Consequently, they’ve been dubbed as “young invincibles.” There’s even a group bearing this name whose intent is to represent and educate the millennial generation about health reform and the importance of health care, in addition to other issues impacting their lives and futures.

Experts say the real reason 20-somethings tend to lack health benefits for the same reasons as their uninsured counterparts: They cannot afford health insurance or their employer doesn’t subsidize or offer coverage. A 2013 Kaiser Health Tracking Poll served as further evidence that while young adults believe having coverage is important, they see cost as a barrier.

There has been much speculated that rate shock will strike in 2014, for everyone, but especially this age group. With the individual mandate, the provision that nobody can be denied coverage due to preexisting conditions, new age-band rating rules and more robust plan requirements as far as benefits are concerned, many have said Generation Y will pay more for insurance than it does now. As such, they will fall back on the young invincible mentality and opt to pay the penalty for going without coverage.

Options through Obamacare, the marketplace

There are many ways 20-somethings can save money when it comes to health insurance—both with and outside of the Affordable Care Act.

  • Dependent coverage extension – Young adults can still stay on a parent’s plan until turning 26, as mentioned earlier in this article
  • Catastrophic plans – Insurance plans sold on the new state-based health insurance exchanges fall into four metal levels. People under age 30 may opt for a catastrophic plan with a higher deductible and lower premium.
  • Tax credits – Those who make up to 400 percent of the federal poverty level will qualify for a tax subsidy. The Health eDeals Health Care Reform calculator allows individuals and families to estimate their annual health insurance premium costs before and after the tax credit in 2014. The catastrophic plan is not eligible for a tax credit.
  • Temporary coverage – Those who just turn 26 and don’t have access to an employer-sponsored plan, job seekers, older grad students and others on their way to a full-time gig with qualified benefits but not quite there may benefit from short-term medical insurance.These temporary plans can be quickly obtained online and last 30 days to 6 months—and up to 364 days in some states. Monthly premium payments start around $30 per month, depending on the benefits selected.

Opt-out penalties, dangers

Still, taking the tax penalty will be tempting and even deemed necessary for some. In 2014, according to the Kaiser Family Foundation, it will be $95 per adult and $47.50 per child (up to $285 for a family) or 1 percent of household income, whichever is greater. Going without coverage, no matter how old or young you are, is a big gamble. An accident or unexpected illness can happen at any time and wreak havoc on health and finances.

Chronic conditions such as arthritis, cancer, diabetes, heart disease and hypertension are found in 15 percent of young adults aged 18 to 29, according to a 2009 Commonwealth Fund study. Half of young adults are considered above a normal weight range; 24 percent qualify as obese.

According to the study, “More than one-third (35 percent) of all young adults surveyed, both insured, and uninsured, reported problems with paying medical bills, including having trouble making payments, being contacted by a collection agency because of their inability to pay bills, significantly changing their way of life in order to pay medical bills or paying off medical debt over time.”

Twenty-somethings—or anyone else—looking for guidance in buying health insurance an affordable plan that meets their health care needs should contact a Health eDeals sales specialist or their insurance agent for assistance.