A 2009 report by Families USA shows the percentage of uninsureds is highest among Americans aged 19 to 24 (49.5%). Some of this is, no doubt, due to choice or lack of serious consideration, however old coverage restrictions also placed young adults in a state of limbo.
The Healthcare Reform package passed by the US House of Representatives in March 2009 makes more options available to young adults under age 26. Some of these went into effect immediately on passage. Others are phased in or do not go into effect until 2014.
Coverage Under Parents' Plans Extended
One could almost hear the collective cheers of parents and students across the US when healthcare reform passed. Previously, children over 18 continued to qualify for coverage under a parent's plan only as long as they remained full-time students and had not reached age 23. This left many high school and college graduates uncovered as they searched for jobs that became ever more elusive with the start of the recession.
One provision of reform that went into effect immediately after passage was the continuation of coverage under a parent's plan for any young adults under 26 who were not offered coverage by an employer. However, this may not be as good as it sounds. It appears that instead of being included in the employee/child rate or the family rate, they will be charged at the rate for an adult individual.
This could add considerably to the cost of a parent's plan, especially if they have more than one needy child in that category, and it seems doubtful employers would fund the entire cost. Relatively healthy young people may find private insurance purchased on the open market a better deal or still the best they can afford.
Benefits of Continuing on Parent's Plan
If the parent is insured by a group plan, children under 26, while more costly to cover, cannot be denied coverage for preexisting conditions. By 2014 when the full provisions of reform take effect, no one will be denied coverage. Until then preexisting conditions can still lead to denied or more expensive healthcare coverage. Also, at the very least, this allows parents who can afford it temporarily to avoid the desperate scramble for coverage on graduation.
Catastrophic Coverage Option
Young adults under 26 who don't take or have available an option for coverage under a parent's plan, will be eligible for catastrophic coverage. The plan will have a $6000 deductible, meaning only the cost of a major illness or injury would be covered. Again, depending on the cost, healthy young people may find lower deductible plans for less on the open market.
The government will also be offering temporary "high risk" coverage until new preexisting rules take effect. To qualify an individual must not be able to purchase private coverage due to a preexisting condition and must have been without coverage for at least six months.
Medicaid Option and Penalties for the Uninsured
Perhaps the next biggest change for young adults will be penalties charged for going without medical coverage. While some young people find coverage unaffordable, others don't take the need seriously or aren't sure how to go about obtaining it.
However, in order for reform to work as many people as possible must be covered, especially younger healthier individuals. So starting in 2014 uninsureds will pay a penalty tax as follows:
- Starting in 2014, the greater of 2% of income or $95
- By 2016, the greater of 2.5% of income or $695
There will be exemptions for undue financial burden and religious objections.
Also starting in 2014 Medicaid will expand to include anyone whose income is less than 133% of the poverty level. Currently that comes to $14,404 annually for an individual. This may provide a remedy for low-paid young adults or those working several part-time jobs with no benefits.
In 2010, $695 represents about the standard one month premium for an individual under a large group plan. Even on the private market where costs for young healthy individuals can be much less, it would be difficult to find coverage for less that $1200 a year. Consequently, many young adults may still decide to forgo coverage not realizing that one auto accident could bring financial ruin on them or their families.
Young adults and parents of young adults should review their options carefully, and check with their insurers if they are already covered. Together they may be able to work out solutions not available previously like sharing the cost of a parent's plan or considering how much they could afford together in terms of deductibles.
Find this article useful? Read also Healthcare Terminology.
Sources:
FamiliesUSA. Americans at Risk: One in Three Uninsured (accessed March 23, 2010).
Kaiser Health News. Consumers Guide to Health Reform (accessed March 23, 2010).
Nannette Croce - Nannette Croce is a writer and editor who has worked with online publications for more than ten years, most recently as Co-Managing Editor ...
