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Health Insurance Options for Young Adults

As the Affordable Care Act continues its long process toward full implementation, it has disrupted the previously stable information about health care for young adults. Under the Affordable Care Act, young adults are permitted to retain coverage through a parent’s insurance up to age 26. After that, they must transition to another option for health insurance coverage.

Insurance Exchange

Possibly the most direct method for young adults to get new health insurance is through one of the insurance exchanges run by the state they live in or through the Federal Government’s website. The upshot of choosing this approach is that you know that the insurance you get meets the individual mandate requirements of the Affordable Care Act. There is usually a fairly quick turnaround between selecting a policy and receiving coverage.

Employer-Offered Insurance

For young adults who are employed and about to be removed from a parent’s insurance, employer-offered major medical insurance serves as another option. By law, any employer-offered medical major insurance is required to fulfill the individual mandate. This option can prove either a good or bad option for you. Employers generally cover a portion of the premium and the employee covers a portion with an automatic deduction from their pay. You need to compare your contribution to the employer plan with your premium through an exchange, as well as the coverage to determine if the employer plan is both economically viable and provides sufficient coverage for your needs.

COBRA

If you face a job loss from an employer who provided insurance for divorce from a spouse who previously provided insurance coverage through his or her job, you become eligible for COBRA coverage. Under the COBRA law, in cases of job loss or divorce, the employer/insurance provider is required to offer you the same insurance. The caveat is that you become responsible for the entire premium, which can prove substantial for high-end insurance coverage. You also have a limited time frame in which to apply for COBRA coverage.

Medicaid

Some young adults do not earn insufficient income to secure coverage through insurance exchanges. If your income falls below the income threshold, $15,800 for a single adult, you become eligible for Medicaid in most states. Medicaid offers very inexpensive or no-cost medical coverage to low-income adults 65 years old and younger. It should be noted that 12 states, including Texas, Florida, and Pennsylvania, did not expand their Medicaid coverage. In those states, the income threshold that disqualifies you from Medicaid is lower.

As young adults continue to age out of their parents’ insurance plans, it’s important for them to be aware of the options available to them. Failure to secure health insurance makes you liable for shared responsibility fines. While the fines are comparatively small, ranging between $95 and a few hundred dollars, it’s an easily avoidable fine. Additionally, failure to secure health insurance coverage leaves you liable for the full medical care costs if you become sick or injured.