The Affordable Care Act of 2010 allowed children below mid-20s to remain on their parent’s health insurance plan irrespective of whether they were offered coverage via their work. This provision aided students who didn’t have access to employer-sponsored health insurance in their initial post-college jobs or didn’t want to pay for a costly college healthcare plan.
Even if they obtain health insurance through their employment, have children, are not listed as a tax dependent, are married, or reside outside of their parent’s house, those below the mid-20s can remain on their parent’s health insurance plan. More than 2 million young adults (aged 19 to 25) received health insurance through the service between 2010 and 2013.
Young adults may save hundreds or thousands of dollars in medical costs by staying on their parent’s health insurance plan or switching to a new program through their work or the Affordable Care Act. However, most people find navigating and comprehending health insurance difficult. According to one study, many people choose health insurance policies that are excessively expensive due to a lack of understanding.
The fundamentals of medical insurance
You’ll need to know a few fundamental health insurance words before you can decide whether to continue on your parents’ plan or switch to one of your own. Each plan has a premium, the amount of money you pay for health insurance each month. Regardless of how many doctor’s appointments or other medical bills you have, you’ll have to pay a monthly premium. You’ll have a deductible, coinsurance, and a co-pay in addition to the premium.
The deductible is the money you must spend on medical expenses before your health insurance begins to pay for a portion of your bills. Your monthly premium does not cover your deductible, and your deductible usually resets every year. After you’ve met your annual deductible, your health insurance will begin paying for a portion of your spending, known as coinsurance. You may have an individual and a family deductible if you’re on a family insurance plan.
While an individual deductible is money, one family member must spend on health care before coinsurance pays a portion of the family’s expenses. In contrast, a family deductible is the amount of money an entire family must spend on medical costs before coinsurance pays a portion of the family’s expenses (or you have co-pays).
Unlike coinsurance, a co-pay is a set amount you pay for specific medical bills. Depending on your plan, co-pays may be required before and after meeting your deductible. In addition, insurance plans include an out-of-pocket maximum higher than the deductible threshold. You won’t have to pay any co-pays or coinsurance after you’ve spent up to your out-of-pocket maximum because the insurance company will cover all of your medical expenses.
For example, if you get your health insurance under the Affordable Care Act, the out-of-pocket maximum for individuals is $8,700. All the medical expenses will get covered in it. Your deductible, coinsurance, and co-pays include in your out-of-pocket limit, but not usually. Your out-of-pocket limit is not affected by your monthly premiums, out-of-network services, or services that your plan does not cover.
Finally, you’ll need to know the insurance plans you’re selecting. Health insurance businesses work by negotiating lower pricing on medical services with hospitals, doctors, and labs. In-network providers are hospitals, doctors, and labs with whom the health insurance company has bargained. In-network providers are often less expensive for customers, regardless of their type of plan.
Depending on the type of plan you have — EPO, HMO, POS, or PPO — out-of-network expenses may or may not be covered (though most plans will cover out-of-network costs in the event of an emergency). Some healthcare programs, such as HMOs, require patients to see a primary care physician before being referred to a specialist.
What should you consider before making a plan change?
When evaluating health insurance plans, consider several criteria such as any chronic medical conditions, whether doctors and hospitals are in-network for the various programs and the cost of staying on your parents’ plan versus getting your own. High deductible plans lower monthly rates, making them suitable for young, healthy people who have no chronic medical concerns.
You may have qualifications for a Health Savings Account (HSA) if you choose a high deductible health insurance plan, regardless of whether you are employed. Persons can put up to $3,650 in pretax money for single-insured individuals and $7,300 for families for qualified healthcare expenses like prescription medicines or co-pays with an HSA.
Chronically ill people may prefer a plan with a higher monthly premium but a smaller deductible because they are more likely to exceed due to ongoing medical expenses. The monthly premium cost for a family insurance plan can also depend on the number of persons on the program. It would be best if you figured out the extra cost of being on your family’s plan against the cost of acquiring your plan. Some plans charge a higher price for adult children, while others don’t charge a significant difference in rates depending on the number of individuals on the program.
Finally, you’ll want to keep track of when you’re eligible to enrol in various health insurance policies. Every year, employers hold an open enrollment period during which employees can sign up for health insurance for the first time or alter their plan.