Best Health Insurance for Young Adults

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Twenty-somethings and young adults have a few more choices for health insurance than older adults but some choices may be better than others. Which choice is right for you?

The good news is that your health insurance is likely to be less expensive than for older adults. Health insurance is one of the types of insurance where your relatively young age works to your advantage because age is one of the primary factors that determine the cost of health insurance.

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The Best Health Insurance For Young Adults:

Staying on a Parent’s Plan vs. Buying Your Own Health Insurance

In most cases, you can stay on a parent’s health insurance plan until age 26. Before your 26th birthday, you’ll need to find another solution, which means you’ll want to start your research well before that date.

Even if you’re eligible to stay on your parent’s plan, you might choose to purchase your own coverage before age 26 or to enroll in the health insurance plan offered through an employer.

If you live on your own and aren’t claimed as a dependent, you have several options. If your parents still claim you as a dependent, it may make sense to stay on your parent’s plan because you may not qualify for subsidies with an individual plan. Health insurance subsidies for plans under the Affordable Care Act consider family income, meaning they include your parent’s income if you live at home.

Generally, you can join or stay on your parent’s plan even if you are:

  • Married
  • Not living with your parents
  • Attending school
  • Not financially dependent on your parents
  • Eligible for a health insurance plan through an employer

Consider your options carefully and read the fine print twice. If you’re away at school or live away from home, your parent’s plan may not provide the level of coverage you need.

For example, if your parent’s plan is an HMO and there are no in-network providers where you live for school, the plan probably won’t pay for your out-of-network coverage unless it’s emergency care. This can be a consideration for PPO plans as well, where coverage will apply but out-of-pocket costs may be higher for out-of-network coverage.

See If You Qualify for Medicaid

Medicaid, a joint federal and state program, is designed to provide free or low-cost essential health care for low-income households. Millions of Americans utilize the program, although income qualifications vary by state.

Medicaid eligibility is based on your income relative to the federal poverty level (FPL), which is $12,490 for single-member households in 2019. If your income is between 100% to 200% of the FPL, you may qualify for Medicaid coverage with no premiums. Medicaid is administered at the state level, subject to federal rules.

n some states, the program goes by a different name, like Medi-Cal in California. To check your eligibility based on income, you can use the calculator on Healthcare.gov. For some states like California, you’ll be redirected to the marketplace for your state to find more information.

Check Out The Marketplace (Healthcare.gov)

Created with the Affordable Care Act (ACA), the Marketplace at Healthcare.gov provides a centralized starting point for buying ACA-compliant health insurance plans.

You’ll also find short term health insurance options for your area — but some states use their own marketplace to list options and for residents to secure coverage. Depending on income and plan choice, both cost-sharing and premium assistance may be available for Marketplace plans.

As your income grows, cost-sharing provisions phase out, leaving only premium assistance, which then also phases out at a higher income level. ACA Marketplace plans offer a list of required coverages including but not limited to:

  • Prescription drugs
  • Preventive and wellness services
  • Emergency services
  • Hospitalization
  • Pregnancy, maternity and newborn care

Several other related coverages are included but most plans do not include dental or vision care for adults. Dependent children are covered for dental and vision, however. If you choose a Marketplace plan and need vision or dental care, consider using a discount dental plan or vision plan.

Marketplace plans are sorted by metals groups. Bronze-level plans have the lowest premiums but also potentially larger out-of-pocket expenses. Starting with silver-level plans, you may qualify for cost-sharing and for premium subsidies that reduce your overall health insurance costs through a tax credit. Gold and platinum-level plans generally offer higher levels of coverage and lower out-of-pocket expenses in exchange for higher premiums than bronze and silver plans.

Marketplace plans are subject to fixed enrollment periods during which you can join a plan. The most recent open enrollment was between November 1 and December 15. If you have a qualifying life event, such as you lose your health insurance coverageelsewhere, you may qualify for a special enrollment period.

Catastrophic Health Plans

If you’re under 30, you’re also eligible to purchase a catastrophic health insurance plan. Deductibles are high with catastrophic plans but premiums are low. Healthcare.gov advises that if you qualify for a premium tax credit based on your income, a bronze or silver plan may be a better value than a catastrophic health plan, which isn’t eligible for tax credit subsidies toward premiums.

Expect a deductible of $7,900 for catastrophic coverage in 2019, after which the insurer pays for all covered services with no coinsurance or copayment. Not all catastrophic health insurance plans offer preventive care. Prescriptions, lab services, radiology and other services often aren’t covered either, so it’s important to understand what is covered and where the coverage has gaps.

It’s best to think of catastrophic coverage as hospital coverage or coverage for extended illnesses. In effect, a catastrophic health insurance plan makes the consumer responsible for many small and medium expenses and it puts a ceiling on your potential higher expenses.

Short Term Health Insurance Plans

If you find yourself between enrollment periods and don’t have a qualifying life event that allows you to enroll with a special enrollment, a short term health insurance plan can provide an interim solution. The advantages of a short term health insurance plan are that you can enroll at any time and that premiums are often more affordable. However, premiums are lower for a few reasons.

Short term health plans aren’t required to have the same coverages as ACA-compliant plans, which means some preventive services may not be covered. As another important consideration, preexisting health conditions also may not be covered. Short term health insurance plans are now available for terms of up to 364 days, a vast improvement over previous ACA rules that limited short term health insurance to 90 days. While the federal mandate requiring health insurance coverage has been removed, New Jersey has its own state-level mandate and California has advanced legislation to require health insurance for state residents.

Due to its limited coverage, it’s likely that short term health insurance won’t meet the requirements in these states.

High-Deductible Health Insurance Plans with Tax Advantages

Young adults are in a unique position to take advantage of a high-deductible health insurance plan (HDHP) combined with a health savings account (HSA).

While this structure can be riskier for families or people with more frequent healthcare needs, young adults in good health can benefit from lower premiums and tax-free savings for approved medical expenses. HSA funds can also be used to pay deductibles, copays and coinsurance.

HDHPs have a minimum deductible of $1,350 per individual and $2,700 per family in 2019. Maximum out-of-pocket expenses can be high as well, with caps of $6,650 for individuals and $13,300 per family. However, an HDHP makes you eligible for an HSA, which is a powerful tool for preparing for future health expenses. The tax-free structure of HSAs helps to supercharge your health savings and when used for approved medical expenses, which can include dental and vision care often not covered by health insurance plans, your withdrawals are tax-free as well.

Accrued savings in HSAs can also be used for retirement purposes once you reach a qualifying age. Withdrawals used for retirement income are subject to income tax at the time of withdrawal, much like a 401(k) or IRA. An HSA combined with a high-deductible health insurance plan allows healthy young adults to use the power of compound interest to build sizable health savings and save money on monthly health insurance premiums.

Best Health Insurance for Young Adults

It’s difficult to find health insurance providers who offer coverage everywhere; available options vary by market.

Once you choose a plan, however, you’re covered anywhere in the U.S., although HMOs may only provide emergency care when you travel in other states. Look for health insurers that offer a large network of providers but keep a close eye on deductibles, coinsurance and out-of-pocket costs if you choose a plan that does not qualify for an HSA. Some of our favorites include:

1. Blue Cross Blue Shield (BCBS)

Blue Cross Blue Shield forms an expansive nationwide network through its 39 regional companies.

Although better known for traditional health insurance plans, BCBS also offers high-deductible health insurance plans that can be combined with a tax-advantaged HSA to reduce premiums and build a tax-free health savings nest egg.

BCBS’s network of providers is amongst the largest in the country, and plan choices range from cost-effective HMOs to choice-driven PPOs as well as HDHPs.

2. UnitedHealthcare

While not always the least expensive health insurance provider, UnitedHealthcare, the largest health insurer in the U.S., offers the biggest nationwide network of providers.

Expect a wide range of online tools to manage your health insurance account, which includes the ability to order approved prescriptions and online access to wellness programs.

UnitedHealthcare offers the most common types of health plans, including HMOs, PPOs and HDHPs.

Indemnity plans, which can be used to supplement existing health plans, are also available.

3. Cigna

While limited to a dozen scattered by populous states, Cigna has become a widely-respected health insurance provider with a large network of HMO and PPO providers.

The Connecticut-based insurer has been helping protect its customers against catastrophic expenses since 1792. 

The company also offers dental and vision plans to complement its health insurance offerings.

Cigna also offers high-deductible health insurance plans if you’re interested in health savings accounts.

However, short term health plans aren’t available. 

4. Kaiser Permanente

Focused primarily in the western states, Kaiser Permanente has a network of over 22,000 participating physicians throughout its numerous hospitals and medical centers.

For cost-conscious consumers, Kaiser Permanente is a solid choice and offers more affordable options than some competitors because the insurer uses its own network of providers.

Kaiser Permanente makes an HSA option available with all plan types, but deductibles can be high.

If you consider a HDHP with Kaiser Permanente, double-check your budget to be sure you can contribute enough to your account to cover expected out-of-pocket expenses.

Final Thoughts

Purchasing health insurance as a young adult makes some options more viable than for older adults.

Expect rates to be lower based on your age, but also consider using a high-deductible health insurance plan to lower premiums even further.

It’s important to stay disciplined with these plans, however. An HDHP requires a well-funded HSA because even if you’re in great health, accidents happen — and they can cost thousands in medical expenses.

Frequently Asked Questions

1) Q: Is health insurance required?

1) Q: Is health insurance required?

The federal mandate that required health insurance has been lifted but some states have enacted state-level mandates that require residents to have health insurance. Even where not required, health insurance can protect your family against catastrophic healthcare costs and help make routine medical expenses more predictable. Get your most affordable quote through our top providers today.


2) Q: What does health insurance cover?

2) Q: What does health insurance cover?

Most health insurance plans provide the 10 essential health benefits that were part of Obamacare requirements. Coverages include preventive and wellness services, prescription drug coverage, emergency services, ambulatory services, lab services, pediatric services, and more. Many plans cover a wider range of healthcare expenses but may cost more than basic plans or may have higher out-of-pocket costs for some services.Get a custom health insurance quote to cover you and your family today.


3) Q: How can I save money on health insurance?

3) Q: How can I save money on health insurance?

For healthcare plans that comply with the Affordable Care Act, only a handful of rating factors affect your premium. These include age and location, at least one of which can’t be changed. Smokers will pay more in most cases and your choice of plan level can affect premiums as well. Choosing a high deductible health insurance plan can reduce the cost of premiums. These plans can be combined with a health savings account to take advantage of tax-free savings for healthcare expenses. Get the cheapest health insurance premium from top providers.

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