Like many recent grads, after Maegan Samuel got her bachelor’s degree from Howard University in 2014, she held a series of temporary jobs — day care worker, secretary — before landing a permanent position a year ago working in operations for a nonprofit association of public health programs in the District of Columbia. Yet throughout this unsettled time, there has been one constant she could count on: her mom’s health insurance, which has covered her as a dependent all along.
Should you do the same? As graduation approaches for thousands of young adults this spring, sorting out your health insurance options may seem more daunting than any political economics problem you came up against at school. You may not think it’s a high priority, but remember: Even healthy young people wind up in the emergency room for all sorts of mishaps, and having health insurance will let you get preventive care, including contraceptives, without paying for it.
With that in mind, do you stay on your parents’ plan as Samuel did, or is it better to sign up for insurance through your own job if it’s offered to you? If you’ve got a college health plan, should you switch to your parents’ plan when it ends or buy a plan on the health law’s marketplace instead? What about Medicaid?
Before the Affordable Care Act, young people graduating from school typically had few options for health insurance, but it’s different now.
The law allowed adult children to stay on their parents’ health insurance plans until they turned 26 and states to expand Medicaid coverage to individuals with incomes up to 138 percent of the federal poverty level (about $16,000). Since the law passed, the rate of uninsured people ages 19 to 25 has declined by more than half, to 14.6 percent for the first nine months in 2016, according to the Centers for Disease Control and Prevention’s National Health Interview Survey.
If you have multiple health plan possibilities, how do you choose? There’s no single answer that works for everyone, but there are guidelines to keep in mind as you think about your options.
Take A Look At Your Parents’ Health Insurance.
In 2015, 29 percent of 19- to 25-year-olds were covered as dependents on their parents’ job-based plan, according to a Commonwealth Fund analysis of data from the U.S. Census Bureau’s Current Population Survey. It was the most common type of coverage for this age group.
Employer-sponsored plans are often more generous than an individual plan on the marketplace, with more comprehensive benefits and lower premiums and out-of-pocket costs. And parents can pass these benefits on.
In Samuel’s case, she stayed on her mother’s plan even after she was offered coverage through her own job. Her mom was willing to pay the entire premium for the plan, leaving Samuel responsible only for copays and other out-of-pocket costs. Such parental subsidies can make all the difference.
“I’m trying to stabilize my finances,” said Samuel, who lives in Silver Spring, Md. “I didn’t want that money pulled out every month.”
If you have health insurance through your college that will end when you graduate, you may qualify for a 60-day special enrollment period to sign up for new coverage, and you can enroll in Mom and Dad’s plan then if you like — even if you’re married or don’t live at home.
A key consideration: privacy. It’s likely that the insurer will send the policyholder, in this case your parents, insurance notices describing any care you receive.
Compare Coverage Through Your Employer.
Seventeen percent of young adults were insured by their own employer in 2015.
Large employers often offer insurance plans, called PPOs, that let workers choose their own doctors and providers from the insurer’s network and often allow them to seek care outside the network if the patient pays a larger share of the cost. A typical PPO plan offered by an employer with at least 500 employees paid for 87 percent of enrollees’ health care costs on average, according to data from benefits consultant Mercer. Compare that with the most popular silver-level plans sold on the ACA’s online marketplaces, which pay 70 percent of costs.
One benefit of an employer’s plan over your parents’: Buying your own plan may improve the odds that you’ll find doctors and hospitals nearby that are in your health plan’s provider network, said Erin Hemlin, director of training and education at Young Invincibles, an advocacy group for young adults.
A key consideration: If you do sign up for your own plan, you may get a break on your premium or a lower deductible for participating in the company’s wellness program. Those perks typically aren’t available to people who are dependents on a policy, said Jay Savan, a partner at Mercer.
If Employer Coverage Isn’t An Option, Consider The State Marketplace.
Twenty-two percent of young adults under 26 had marketplace coverage in 2015.
Marketplace plans must provide comprehensive coverage, including hospitalization, drugs and doctor visits. In addition, if your income is between 100 and 400 percent of the federal poverty level (about $12,000 to $48,000 for an individual) you could qualify for tax credits that will help cover the cost of premiums.
If you have a college health plan that ends when you graduate, you may qualify for a special enrollment period to sign up for a marketplace plan. But if you’re uninsured or insured through your parents, you probably can’t buy a marketplace plan until the next open enrollment period in the fall.
A key consideration: If your parents claim you as a tax dependent, you can’t claim the premium tax credit yourself, said Judith Solomon, vice president for health policy at the Center on Budget and Policy Priorities.
Unemployed? Uninsured? Consider Medicaid.
In 2015, 15 percent of people between ages 19 and 25 were on Medicaid.
To date, 31 states and the District of Columbia have expanded Medicaid coverage to adults with incomes of about $16,000 or less.
If you don’t have a job or earn very little and you live in one of these states, you may qualify for Medicaid, which provides comprehensive coverage, typically without a premium.
Unlike marketplace coverage, there’s no open enrollment period for Medicaid. You can apply anytime through your state Medicaid agency, healthcare.gov or your state marketplace.
A key consideration: If your parents claim you as a dependent on their taxes, it could also affect your eligibility.
As for Samuel, her time as a dependent on her mom’s plan is drawing to an end. She’ll turn 26 in September and will no longer qualify for coverage. At that time, she plans to sign up with her employer’s health insurance plan.