Healthcare Financing For Young Adults

During transition, a teen should think about what insurance coverage they have now and when it will need to change. Additional good questions to ask are: How will you pay for your healthcare? What types of insurance are you eligible to get? How do you pick which option is the best choice for you? Health insurance is both a financial decision and a healthcare decision. Eligibility may be based on income, school or employment status as a teen ages.

Basically, health insurance coverage is an agreement between an individual (or the group the person is purchasing the plan with) and an insurance provider­ to share the cost of an individual’s healthcare. The insurance provider might be a private company or a public government program.

Understanding the Terms

There are some basic health insurance terms that are important to understand:

• Premium. This is a monthly payment to a health insurance company that provides coverage in a plan. Sometimes the person pays the whole amount, and other times the cost may be shared with the employer.
• Deductible. The deductible is the total amount that must be paid by the person before the health insurance provider starts to cover that year’s costs. There is usually a fixed total amount per year, such as $5,000.
• Benefits. These are the types of services which the health insurance provider agrees to pay for.
• Co-pays. These are the fixed upfront costs the person pays for various services, such as $25 for an office’s visit or $100 for a trip to the emergency room. Often the insurance then covers some or all of the remaining costs.
• Co-insurance. The percentage of the costs for a covered benefit that the person pays (for example, 20 percent) after they have already spent their whole deductible.
• Out-of-pocket maximum. This is the maximum amount the person will pay before the insurance covers all the costs.

When a teen considers their options, they will want to weigh what plan is appropriate for them. Making that choice is based on two questions:

• What coverage are you likely to need?
• What will it cost?

Knowing Insurance Options

Here are the typical options for young adults:

• Continue on a parents’ employer’s plan. Under the Affordable Care Act, a dependent can continue coverage on a parent or guardian’s plan until the age of 26. Depending on the type of coverage and the premium costs, this plan may or may not be the best choice. In addition, some employer plans allow a child who is a dependent with a dependent disability to stay on their plan even beyond the age of 26.
• Use an employer’s plan. Many employers offer health insurance plans as part of a benefits package. Several companies have insurance options for part-time as well as full-time employees.
• Buy into a student health plan. Many colleges and universities offer student health plans. Check with the school to learn the options. Sometimes, these plans offer more limited coverage. Be aware that the plan may end once a student leaves the school.
• Enroll in Medicaid. Ask about eligibility for Medicaid disability. To qualify, a person will apply once they are 18 or older through Social Security. Their eligibility will be based on the adult eligibility rules. If an individual does not have serious health conditions, they may not be eligible for Medicaid disability as an adult. Separately, there are special Medicaid home and community based services for children and adults with certain categories of disabilities.
• Enroll in Healthy Indiana Plan (HIP). If a child had coverage through Medicaid based on household income, that child will typically age out of the program at their 19th birthday. The HIP plan covers adults ages 19 to 64 in Indiana who meet specific low-income levels. Signing up through HIP Plus to make monthly plan contributions based on income can decrease total out-of-pocket costs.
• Use the federal exchange. If there are no coverage options from school or work or based on a disability, the exchange provides multiple options for purchasing plans. There also are federal subsidies that rebate some costs depending on income. In general, platinum plans are more costly upfront and then are projected to cover about 90 percent of an individual’s healthcare costs. The cost and amount of coverage decreases as the levels drop from platinum plans to gold, silver and bronze plans.
• Consolidated Omnibus Budget Reconciliation Act (COBRA). When leaving a private plan, an individual may be eligible for a temporary extension of coverage through COBRA. There are specific conditions that must apply, and the costs are often more expensive than other options. Many of the processes involved in COBRA are retroactive. It is important to learn from the plan or employer how to correctly engage the services.

If a young adult decides they cannot afford health insurance, they may have to pay a fine through their income tax submission for not having insurance. The tax penalty may be a small percentage of their household income or an amount for each adult in the household.

Those answers will vary depending on each teen’s needs. For a teen with no chronic health conditions or no significant anticipated health costs, sometimes a less expensive plan might be the right option. But what if that person then experiences a significant illness or injury at some time during that year? The same plan that sounded good at first, because it is cheaper, will provide less coverage and require significantly more out-of-pocket costs. Part of making the choice relates to whether a person is willing to take the risk that they won’t have significant health costs in the coming year.

Where to Find More Help

If a teen or young adult has trouble finding satisfactory coverage, then seeking further advice is a good next step. Social workers and disability advocate organizations are strong resources to help with this advice. Healthcare.gov has a special page just for young adults.

There are also some options for local safety net programs. Particularly for youth with chronic conditions in Indiana, the Children’s Special Health Care Services (CSHCS) program provides supplemental medical coverage for youth and families that meet the program’s financial and medical diagnosis criteria and have paid for treatment related to their child’s condition up until age 21.

Community health centers are public and private non-profit healthcare organizations that serve a medically underserved population. This is often based on low-income levels. For those without health insurance coverage, fees are usually assigned on a sliding scale based on income. The Indiana Primary Health Care Association may be able to recommend a local community health center. There may be other free clinics based in the community and religious organizations which can serve as another way to fill in access gaps.

Pharmacy assistance programs are another possible way to lessen costs. Medicare.gov offers one source for pharmacy assistance programs.

Community mental health centers are located across the state as well. They often provide mental health services that often include outpatient visits as well as home and school options. The Indiana Council of Community Mental Health Centers can help with finding a center.