The millennial generation had the highest rate of uninsured individuals (16%) in the United States, according to a study. Some of their reasons for remaining uninsured included a lack of knowledge about how to enroll, a lack of time during the open enrollment, the complexities of navigating health insurance, and a lack of confidence in their options. Millennials are becoming more aware of the significance of buying health insurance. They recognize the importance of having financial protection in the event of a medical emergency, so they are investing in a health plan for themselves and their families. However, health insurance is a technical cover, so here is a simple guide to the policy if you are considering buying it.
Why is Important for Millennials to Have health insurance?
Before delving into the inner workings of health insurance, it’s probably more important to understand why it’s necessary in the first place. As a millennial, you may believe it is safe to go without health insurance for a while. Surprisingly, millennials have more medical debt than the elderly baby boomers. According to a National Financial Capability study, 25% of people aged 18 to 50 have unpaid medical bills. These statistics may reflect a lack of health insurance for young adults, or a lack of funds to pay bills even if they have coverage. Nonetheless, they demonstrate that millennials have medical bills as a result of needing healthcare at some point.
Health insurance for young adults is important because it protects them from financial ruin in the event of a medical emergency (which is more common than you may think). The most important reasons a millennial should have health insurance are-
- You will be ready for the unexpected. Nobody expects to get sick or injured. Health insurance, like car insurance, protects you and your wallet from the unexpected.
- Without coverage, you may end up paying more. While health insurance is an expense, the cost of care without it may be much higher than you anticipate. Going to the emergency room, seeing a doctor, and having tests and/or medical procedures performed (even if minor) can quickly add up.
- Keeping healthy now may help you avoid costly health problems later. People who have health insurance are more likely to visit the doctor regularly for services such as annual checkups, flu shots, and routine bloodwork.
- You certainly can! If you are employed, even if it is a small business, you most likely have access to health insurance. Furthermore, if you are 26 or younger and your parents have health insurance, you may be able to join their plan.
Terms a Millennial Should Understand before Buying Health Insurance?
Only 36% of millennials correctly identified any of the four basic health insurance terms, according to a literacy survey (deductible, co-insurance, co-payments, out-of-pocket-maximum). To be fair, only 4% of Americans, in general, could define all four terms. Health insurance is most likely a foreign concept to millennials. As millennials leave their parents’ insurance plans and begin looking for their own, they must understand the terms used in health insurance policies, such as:
- Premium- A premium is an amount you pay each month to keep your health insurance policy active. Premiums can vary depending on a variety of factors, including age and location. The average premium for those aged 18 to 24 is around $280, and $330 for those aged 25 to 34.
- Deductible- A deductible is the amount of money that your insurance company expects you to pay before it covers costs. For example, if you have a $1,000 deductible on your insurance policy and receive a $2,000 medical bill, you must pay the first $1,000 before your insurance provider will cover the rest of the bill.
- Copayment- When receiving medical services, many insurance companies require you to pay a copayment, especially for doctor’s visits or prescription medications. You will typically pay the same amount each time, and many plans offer varying copay rates so you can find one that best suits your needs and budget.
Choosing a Health Insurance Plan as a Millennial
When looking for your first health insurance plan in your twenties, it can be difficult to know what you require. Assessing your needs and selecting the appropriate insurance tier can help you stay within your budget while also protecting your health.
For people in their twenties, many health insurance professionals recommend a catastrophic health insurance plan. A catastrophic plan offers essential medical coverage for emergency and preventative healthcare services, which can help protect you in the event of a serious illness or an accident. Furthermore, catastrophic coverage rates average around $195, making them affordable.
Other healthcare tiers are:
- Bronze tier: This tier provides basic healthcare coverage at a lower cost. This tier may be ideal for millennials who want more coverage than catastrophic plans offer but don’t want to pay too much.
- Silver-tier: If you require more coverage than the bronze tier provides, you should consider the silver tier. This tier will necessitate higher premiums in exchange for lower deductibles. This tier may be ideal for you depending on your income and needs.
- Gold tier: Consider the gold tier if you want a simple, all-inclusive health insurance plan. At this tier, your policies will cover more services, making it ideal for people with more extensive needs. At this tier, you will have to pay high premiums, but your reward will be lower out-of-pocket expenses for medical services.
- Platinum tier: This is the most expensive health insurance tier and offers the most comprehensive plan. At this level, you can get the most coverage, which is ideal for people who require more services. This level has the highest premiums, but you may have few to no out-of-pocket expenses.
Knowing how many medical services you require can assist you in determining where you fall on the health insurance scale. While the majority of people in their twenties are healthy and fit, many young people suffer from chronic illnesses and require more care and medical assistance than others. Whatever your situation, there is a health insurance plan that is ideal for you.
What are the Millennial’s Options for Health Insurance Coverage?
You have options when it comes to obtaining millennials’ health insurance coverage. It all depends on your current life situation (employment, income, age). Your options are-
- Continue to follow your parents’ plan. Understandably, you want your independence. But if you’re under the age of 26, this is one of the cheapest ways to stay covered.
- Make use of your student benefits. Full-time students may be able to obtain insurance through their university. If you are currently enrolled in school, inquire with your admissions office about how to obtain coverage. If you see a doctor regularly, you should consider enrolling in your school’s health insurance plan.
- Make your boss pay the bill. Now that you’ve found a great job to pay the bills, check with your boss to see if they provide health insurance. Employer-sponsored health insurance is regulated by the state, which means that businesses with 50 or more employees must provide health benefits.
- Purchase your policy from an insurance marketplace. Healthcare.gov or your state’s marketplace offer health insurance plans. These marketplaces will help you determine if you are eligible for government subsidies based on your financial information.
- Purchase your policy from a health insurance company or broker. If you are not eligible for government subsidies, you can buy insurance directly from a health insurance company or a broker (aka licensed insurance agent).
- Sign up for Medicaid. You may be eligible for Medicaid based on your income (state-subsidized insurance). If you qualify, you will receive lower monthly premiums and other healthcare costs.
A Millennial’s Guide to Buying Health Insurance. Step-by-Step Guide
Now that you’ve determined your options, it’s time to start looking for a plan. But first, you’ll need to gather some information. The steps you should take are-
Learn about insurance plans, tiers, and premiums. This includes the company, plan type, and doctors who are covered. If you’re happy with your current doctors, you should look for a new plan that offers comparable coverage.
Keep track of your earnings from the previous year and project your earnings for this year. This information is critical when applying for coverage on the marketplace because it determines the type of subsidies you are eligible for. This information can be found on your W4s or tax returns.
Determine your healthcare needs and current spending to determine which plan will save you the most money. If you visit the doctor frequently, you should consider a plan with a higher premium and a lower deductible. If you’re young and healthy and don’t see a doctor often, a catastrophic plan might be your best bet.
Contact the health insurance provider you have chosen. Find out from them the steps you should take towards getting valid health insurance as a millennial.
Frequently Asked Questions
What can health insurance provide for me?
You can expect coverage for what the government refers to as essential health benefits. You cannot be denied coverage because of a pre-existing medical condition. Preventive services, such as vaccinations and screening tests, are provided at no cost. Other covered services, such as emergency care, may require payment.
Is health insurance something I can afford?
What you will pay for coverage in 2016 is determined by your expected income. The government provides tax credits to help people with low incomes reduce their monthly premiums, and there are other subsidies available to help lower-income consumers reduce their out-of-pocket costs. Use this calculator to see if you are eligible for assistance: https://www.healthcare.gov/lower-costs/.
What if I do not purchase health insurance?
If you do not, and you have not obtained an IRS exemption, the IRS will penalize you. The penalty will increase to $695 per adult or 2.5 percent of your annual household income, whichever is greater, beginning next year.
How do I know which plan is best for me?
Obamacare has five plan categories: platinum (pays 90 percent of average medical costs), gold (80 percent), silver (70 percent), bronze (60 percent), and catastrophic (which only pays for very high medical costs). The distinction is in how much you will pay for services not covered by your plan.
Understanding health insurance requirements and terms can be difficult for many people, particularly young millennials in their twenties who are attempting to insure themselves for the first time. You can choose a health insurance plan as a millennial by conducting careful research and seeking assistance from resources. Although health insurance premiums are an additional monthly cost, you can reduce them by qualifying for subsidies and shopping wisely. In the end, your coverage will protect you from financial ruin if you suffer from a serious illness or injury.