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In 2010, the Affordable Care Act allowed children under the age of 26 to remain covered by their parents’ health insurance plan, whether or not their employer offered them health insurance. This provision helped those who were not receiving employer-sponsored health care in their first post-college jobs or who did not want to enroll in an expensive college health care plan.
Persons under the age of 26 can remain on their parents’ health insurance plan even if they have health insurance available from their employer, have children, are not declared as a tax dependent, are married or live away from their parents’ home.
Between 2010 and 2013, more than 2 million young adults (between the ages of 19 and 25) had access to health insurance thanks to this offer, according to an estimate by the Ministry of Health and Social Services.
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For young adults, the decision to stay on their parents’ health insurance plan or switch to a new plan, either through their employer or the ACA, could mean saving hundreds or thousands. dollars in medical expenses. However, navigating and understanding health insurance can be confusing for most people: one study found that many often choose health insurance plans that are too expensive for them due to a lack of understanding.
If this is your first time choosing a health insurance plan or you’re trying to decide whether to stay on your parent’s plan, Select defines some common health insurance terms before discussing some of the factors to consider. account when choosing a plan.
The basics of health insurance
Before you can determine whether you should stay on your parents’ plan or switch to a new one, you’ll need to understand some basic health insurance terms.
First, each plan has a premium, which is the amount of money you spend on health insurance each month. You will have to pay a monthly premium regardless of the number of doctor’s appointments you have or other medical expenses you incur. Beyond the premium, you will also have a deductible and coinsurance and/or a co-pay.
The deductible is the amount you have to spend on medical expenses before your health insurance starts covering part of your bills. The monthly premium you pay is not applied to your deductible and your deductible is usually reset each year.
Once you’ve reached your deductible for the year, health insurance will start paying a portion of your expenses, called coinsurance. For example, if your deductible is $5,000 and your coinsurance is 20%, you must spend $5,000 on medical expenses before the insurance company starts paying 80% of your medical bills. If you have family insurance, you can benefit from an individual deductible and/or a family deductible.
A family deductible is the amount of money an entire family must spend on medical expenses before coinsurance pays part of the family’s expenses (or you have a co-pay), whereas an individual deductible is the amount of money a family member must spend on health care before receiving coinsurance.
A co-payment, unlike coinsurance, is a fixed expense you pay for certain medical expenses. Depending on your plan, you may have a co-pay before and/or after reaching your deductible.
Insurance plans also have a maximum out-of-pocket, which is above the deductible threshold. Once you’ve spent up to your maximum, the insurance company will cover all of your medical expenses, so you won’t have to shell out any more money for co-payment or coinsurance.
For example, if you receive your health insurance through the ACA, the maximum payout is $8,700 for individuals. After spending this amount, 100% of your medical expenses will be covered. Sometimes plans include your deductible and co-insurance and co-pay when counting your maximum out-of-pocket, but not always. Your monthly premiums, any out-of-network services, and any services not covered by your plan do not count toward your maximum payout.
Finally, you will want to know what type of insurance plan you choose. Health insurance companies work by negotiating discounted rates — with hospitals, doctors, and labs — on medical services. Hospitals, doctors, and labs that the health insurance company has negotiated with are considered part of the network, and network providers are generally cheaper for people, regardless of what type of plan you have.
Depending on the type of plan you have — whether it’s an EPO, HMO, POS, or PPO — your plan may or may not cover out-of-network expenses (although most plans cover off-grid expenses in the event of an emergency). Some plans, such as an HMO, require people to see a primary care physician before receiving a referral to see a specialist.
What should you consider before switching plans
When comparing health insurance plans, you need to consider a variety of different factors, such as whether you have any chronic conditions, which doctors and hospitals are in-network for the different plans, and the cost of staying with your parents. plan versus getting your own plan.
Plans with higher deductibles generally charge lower monthly premiums, making them a good option for healthy young people without chronic health conditions.
If you opt for a high-deductible health insurance plan, you can also benefit from a health savings account (HSA), whether you are employed or not. With an HSA, individuals can invest up to $3,650 for insured singles and $7,300 for families of pre-tax money for eligible health care expenses like prescription drugs or copayments.
People with chronic conditions may choose to opt for a plan with a higher monthly premium and a lower deductible, as they are more likely to reach the deductible amount due to ongoing medical expenses.
As you look at different plans, you’ll want to check that your favorite doctors or hospitals are part of the network and that it covers all the medications you take regularly.
The number of people on a plan can also influence the monthly premium cost for a family insurance plan. You’ll want to compare the additional cost of joining your family’s plan to the cost of your own plan. Some plans charge a different rate for adult children, while others don’t charge vastly different premiums based on the number of people on a plan.
Finally, you’ll want to keep track of the time frames you’re eligible to enroll in different health insurance plans. Employers typically have an open enrollment period each year where individuals have a few months to enroll in health insurance for the first time or change their plan.
If you do not have employer-sponsored health insurance, the ACA also has an open enrollment period that is open through January 15, 2022 through healthcare.gov. (Note: some states have their own marketplaces, so you’ll need to register using that state’s website.)
If this is your first time navigating the ACA, you can receive unbiased assistance through a ‘helper’ or ‘health care navigator’ who helps people review their options health insurance and filling out forms. You can find assistants near you through the healthcare.gov website.
At the end of the line
Health insurance is confusing and complicated for most people, but understanding the basics of health insurance can help you save money on your medical expenses.
For people choosing between staying on their parents’ plan or switching to a new plan, it’s important to understand how your medical conditions may affect your monthly premiums and the value of your deductible, which hospitals or doctors are considered part of in-network and out-of-network and how the number of dependents on a family insurance plan affects its cost.
If you decide to stay on your parent’s plan, you may want to offer to contribute to help cover some of the monthly costs, especially if they are charged more to have an adult child on their plan and you have time. full work.
Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff alone and have not been reviewed, endorsed or otherwise endorsed by any third party.