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What is the Best Health Insurance for Recent College Grads?

What is the Best Health Insurance for Recent College Grads?

Posted May 15, 2017 by Jenifer Dorsey

Congratulations, college graduate! You’ve earned your degree and accepted your diploma. Now it’s on to the next thing, whatever that might be. If someone asked you to list the key concerns occupying your mind right now, you might include looking for work, finding a place to live, and figuring out a way to pay off your student loans as soon as possible. Don’t forget about securing health insurance coverage. 

Under the individual shared responsibility provision, the Affordable Care Act—aka Obamacare—requires most Americans to buy health insurance that qualifies as minimum essential coverage. Furthermore, enrolling in a health insurance plan is an important part of personal financial planning. Health insurance benefits help reduce your share of covered medical expenses when you receive healthcare.

 

 

Fortunately, it might be argued that young adults in their early twenties have more health insurance coverage options than anyone. So, what is the best plan for recent college grads, those who are still students and others who are in between health plans? It depends on your individual circumstances—employment status, age, income, and access to a parent’s health insurance coverage, etc.

The list below provides a brief comparison of the five most common temporary and long-term health insurance options available to recent college graduates and college students who are still in school.  

1. Obamacare health insurance

2. Short term health insurance

3. Medicaid

4. A parent's health insurance plan

5. Job-based health insurance

 

1. Obamacare health insurance

Major medical health insurance plans that qualify as minimum essential coverage are available through state-based and federally facilitated exchanges, as well as in the private marketplace through insurance producers, health insurance websites, and health insurance carriers.   

By law, these plans must include health care services in the 10 essential health benefits categories, as well as free specified preventive services and screenings. Rates will vary based on factors such as metal plan selected, carrier, geographical location and whether or not you smoke.  

What to consider when enrolling in an Obamacare plan

  • Availability – Open enrollment for 2017 coverage officially ended Jan. 31, 2017. Unless you have a life event that qualifies you for special enrollment, you will not be able to enroll in Obamacare until 2018 open enrollment, which begins Nov. 1, 2017. 

  • Financial assistance – When you buy a health insurance plan from a state-based or federally facilitated exchange, you may qualify for income-based subsidies called premium tax credits. This can help lower what you pay for health insurance coverage each month.  

 

Calculate your tax credit

 

If you do not qualify for this financial assistance, you may want to explore your options in the private marketplace and compare plan details such as premium rates, annual deductibles, coinsurance and copayment amounts, prescription drug benefits, and provider networks.  

 

Who qualifies for Obamacare plans?

Individuals who do not have access to job-based major medical health insurance qualify for Obamacare plans.  

If you buy health insurance from a state-based or federally facilitated exchange, you must apply for subsidies, which are generally available to those who earn between 100 and 400 percent of the federal poverty level.[1]  

Is an Obamacare plan ACA-compliant?

Yes. Major medical health insurance plans sold on state-based and federally facilitated exchanges as well as in the private marketplace fulfill the individual shared responsibility provision. 

2. Short term health insurance

If you expect to start a job with benefits in a month or two, need temporary coverage after you turn 26 but before you enroll in an Obamacare plan, or need a little time to decide what long-term health insurance option is best, you might consider short term medical insurance. Short term health plans provide temporary benefits for as few as 30 days.

You may be young and healthy, but injuries and illnesses can happen to anyone. When they do, they can expose you to medical bills that you may have to pay entirely out of pocket. Short term coverage can help reduce such healthcare expenses.

While different from Obamacare plans, short term health insurance plans provide benefits for covered services such as emergency room visits, surgical services, inpatient and outpatient hospital care, intensive care and more—benefits vary depending on the plan you select. Short term health plans may be customized to your preferred policy length, deductible, coinsurance and more.

What to consider when enrolling in short term coverage

  • The Affordable Care Act – Short term health plans are not ACA-compliant. That means they do not qualify as minimum essential coverage and will not prevent you from owing a tax penalty (i.e., individual shared responsibility payment) if you are not exempt. Also, you can be denied coverage based in your medical history.

  • Circumstances – Short term plans last 30 days to 90 days, depending on where you live and your coverage needs. If you intend to be without major medical health insurance for only a brief period, short term plans can help provide peace of mind that should you need unexpected medical care, you have some health insurance benefits to help pay for covered expenses.  

  • Cost – Short term health insurance plan premiums typically cost a fraction of Obamacare health insurance premiums. Deductibles, coinsurance and copayments still apply. 

  • Accessibility – You can enroll in short term health insurance at any time. The online application process takes only a few minutes, and next-day coverage is available. 

Who qualifies for short term plans?

Relatively healthy individuals who temporarily need health insurance qualify for short term health insurance plans. When you apply, you will be required to answer a few medical questions to determine your eligibility. If you have preexisting conditions, you may want to consider the options listed above. 

Call the number at the top of your screen to speak with a certified advisor, a health insurance producer who can help you explore your options and choose coverage that works with your healthcare needs and budget. Or, get a quick quote by clicking the button below—no contact info requested unless you apply.

Click to get your short-term rate

Is it ACA-compliant?

No. However, each year the healthcare reform law allows you a single period of up to three months without minimum essential health insurance coverage. If you exceed this allowance and do not qualify for an exemption from buying minimum essential coverage, you may owe the shared responsibility payment tax penalty.     

3. Medicaid

Medicaid is a state-federal program that provides low-cost and free health insurance coverage to those who qualify based on income and other criteria, which varies by state. As of March 14, 2016, a total of 32 states and the District of Columbia had expanded Medicaid eligibility to adults under 65 who earn up to 138 percent of the federal poverty level.[2],[3]

What to consider when enrolling in Medicaid

  • Availability – You can apply for Medicaid year-round. 

  • Eligibility – Not all states expanded Medicaid. Visit Medicaid.gov to learn about the program and eligibility criteria in your state.  

Who qualifies for Medicaid?

Again, this depends on the Medicaid program in your state of residence. If your state expanded Medicaid and you earned less than 138 percent of the federal poverty level, you may qualify. If you live in a state that did not expand Medicaid, you should check with your state’s Medicaid program for eligibility criteria. 

Is Medicaid ACA-compliant?

Yes.  

 

 

4. A parent’s health insurance plan—for those younger than age 26

When the Affordable Care Act passed in 2010, one of the first provisions to take effect allowed young adults to remain on their parent’s job-based or individual health insurance plan until their 26th birthday.  

What to consider when enrolling in or staying on a parent’s health plan

Cost – Your parent’s plan may be an easy option, especially if Mom or Dad pays your premiums. However, you may want to compare your various plan options and see how costs, benefits and provider networks stack up.

Who qualifies for their parent’s health insurance?

Adult children through their 26th birthday, regardless of marital status, employment status, financial dependence, whether or not they live with their parents and whether or not they attend school. 

Is a parent’s health insurance plan ACA-compliant?

Yes. As long as your parent’s health insurance plan is considered major medical health insurance—aka, an Obamacare plan acquired through an employer, from a state-based or federally facilitated exchange, or in the private marketplace.  

5. Job-based health insurance 

When you land a job that offers health insurance benefits to its employees, you have done what many aspire to. With job-based health insurance plans, which are also referred to as employer-sponsored or group health insurance plans, employers often cover a portion of employee health insurance premiums. 

What to consider when enrolling in a job-based health insurance plan?  

  • Cost – If you are a young adult under age 26 and have access to health insurance through a parent—a parent who is willing to keep you on their health insurance plan—then you may want to compare that plan’s premium rates, plan deductibles, and benefits with other options (e.g., Obamacare, short term health insurance) to determine what makes the most sense for your health and finances.

  • Waiting periods – If you are subject to a waiting period before your employer’s major medical health insurance coverage kicks in, you may want to consider a short term health insurance plan until your effective date. (Keep reading for information on short term health insurance plans.)

Who qualifies for an employer’s health insurance plan?

As of 2015, large employers (i.e., those with 50 full-time employees or a combination of full-time and part-time employees that is equivalent to 50 full-time employees) must offer full-time employees and their dependents affordable health coverage that provides a minimum level of coverage.[4] In most states, full-time employees are those who work 30 hours per week or more. Contact your employer’s benefits adviser or human resources for details. 

Are employer-sponsored health plans ACA-compliant?

Yes. Major medical insurance plans offered through an employer are considered ACA-compliant and fulfill the individual shared responsibility provision.  

Need help? You’ve got it!

Buying health insurance is a new experience for a lot of people—young adults and older adults, alike. You are not alone.

If you need help deciding which option is right for you or selecting a health insurance plan, a health insurance producer can help. Call the number at the top of your screen to speak with a certified advisor who can assist you—there’s no pressure to buy. Or, you can get an online quote by clicking the link below; you won’t need to provide contact information unless you apply.

 

In a hurry? Get a quick quote!

 

 

 

Originally published on June 25, 2015.


Legal Disclaimers

[1] Internal Revenue Service. “Questions and Answers on the Premium Tax Credit.” Last reviewed or updated March 27, 2015. http://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/Questions-and-Answers-on-the-Premium-Tax-Credit 

[2] The Henry J. Kaiser Family Foundation. “Status of State Action on the Medicaid Expansion Decision.” Last updated March 14, 2016. http://kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/

[3] HealthCare.com. “Medicaid Expansion & What It Means for You.” N.D. https://www.healthcare.gov/medicaid-chip/medicaid-expansion-and-you/

[4] Internal Revenue Service. “Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act.” Last reviewed or updated May 20, 2015. http://www.irs.gov/Affordable-Care-Act/Employers/Questions-and-Answers-on-Employer-Shared-Responsibility-Provisions-Under-the-Affordable-Care-Act#Basics