Will they or won’t they?
That’s the often-posed question about young people and health care reform.
That is, will healthy young people sign up for health insurance in the marketplaces created under the Affordable Care Act (ACA), or will they stay away in droves?
The Obama Administration and insurance companies are relying on enrollment by healthier young people to offset the cost of insuring older enrollees, who tend to use more health care.
Some experts worry about so-called “young invincible” syndrome.
Young people view themselves as invulnerable, they’ll never get sick – so they don’t need doctors, prescription drugs, hospitals – or insurance.
The worry is that young people will just opt to pay the penalty for not having insurance.
The initial penalty is the greater of $95 per year or 1% of income in 2014; it rises gradually from there, to the greater of $695 or 2.5% of income in 2016.
Is the ACA a good deal for young people?
The answer is yes – but the health insurance marketplaces are just one part of the story.
The health reform law includes several other key changes that improve health coverage for people of different ages and life circumstances who don’t get their health insurance through an employer.
If you’re young and don’t have insurance through work, the ACA may allow you to:
Stay on your parents’ plan
Since 2010, insurance companies have been required to allow young people to stay on the health insurance plan of a parent – if the plan includes dependent coverage – until they turn 26 years old.
You can do that even if you’re not living with a parent, aren’t a dependent for tax purposes or are no longer a student.
Married and unmarried young adults qualify for the dependent coverage extension, although it doesn’t cover a young adult’s spouse or children.
This provision has had a huge impact already on getting young people covered; the Commonwealth Fund reports that 7.8 million young adults age 19-25 enrolled or stayed on their parents’ plan in 2012 who wouldn’t otherwise have had that option. (Tweet this)
Get a better plan on campus
Health insurance companies who offer plans through colleges can’t refuse to cover a student who has pre-existing conditions, drop a student who becomes ill, or limit the dollar amount of coverage provided in most cases.
The plans also must offer preventive care without a co-payment.
Enroll in Medicaid
The ACA also expands the availability of Medicaid, the federal-state program that provides health coverage to low income people.
Not all states opted to expand Medicaid, but if you live in a state that did, this an important feature of the ACA. View a map of the states showing which states have expanded Medicaid, and which have not.
Young people are more likely to have lower incomes than other age groups; starting in 2014, Medicaid will cover adults with income up to 133% of the federal poverty level (FPL).
For 2013, that translates into $15,282 for an individual.
Get covered in the new health insurance marketplaces
If you don’t have health insurance through work or your parents, and you don’t qualify for Medicaid, you can buy a policy from a private insurance company in your state’s insurance marketplace.
So, that will be money paid out of your pocket – but perhaps not as much as you think.
For many Americans, the out-of-pocket cost of policies bought through the official insurance marketplaces will be reduced by federal subsidies.
In 2014, the subsidies are available for individuals with annual income between $11,490 and $45,960; for a family of four, they cover households with incomes ranging $23,550 to $94,200.
The definition of income used here is modified adjusted gross income (MAGI), which includes wages, salary, foreign income, interest, dividends and Social Security benefits.
An advanced premium tax credit is available to offset premium costs. The dollars will be applied upfront as an adjustment to monthly premiums.
Many state health insurance marketplaces have calculators that can help you estimate your net cost after subsidies.
HealthcareACT.com has a nifty calculator that can help ballpark net costs.
You can also keep your premiums down by selecting Bronze or Silver plans. The health insurance marketplaces offer four levels of plans labeled Bronze (lowest premiums), Silver, Gold, and Platinum (highest premiums).
Plans with the higher premiums will have lower out-of-pocket costs. Bronze plans, on average, will cover 60% of enrollee costs, with the rest covered by deductibles and coinsurance. Gold and platinum plans will cover 80 and 90% of costs, respectively.
Young, healthy people may find the Bronze plans most attractive and if your coverage is subsidized, the net cost can be very low – or even free after subsidies.
An analysis by the McKinsey Center for U.S. Health System Reform concluded that up to 6 million uninsured people will qualify for subsidies higher than the cost of the cheapest Bronze or Silver plan. (Tweet this)
You may find prices vary quite a bit even within a plan level. That’s because insurance companies are striking up deals with different local health provider networks.
The health networks with the best reputations may be more expensive than some that could be just fine from a quality standpoint, but are more interested in growing their market share as the ACA gets rolling.