Health Insurance for 20-Somethings

In the past, graduation was marked with the anticipation of facing real-world responsibilities. Of that was obtaining health insurance – the exorbitant cost, whether or not to buy and if it was really necessary. In September many young graduates anxieties were quelled when one of the first parts of health care reform went into effect. Under the Patient Protection and Affordable Care Act young adults are now allowed to stay on their parents’ health insurance plan until age 26.

Before the landmark Act was signed into law, many young adults were left with no insurance after graduation and no means to pay for expensive coverage. Experts say myths such as the “invincible” young adult who never gets sick are generally not the primary reason for lack of coverage. Instead young adults face the same reasons for not having health benefits as their other uninsured counterparts: they don’t make enough money to be able to afford insurance or their employer doesn’t subsidize or offer coverage.

Robyn Jordan, a 2007 graduate of Indiana University’s Bloomington campus found herself without insurance after she was put on hiatus because of the 2008 Writers Guild Strike. She found herself in need of a job, primarily because of insurance purposes.

“If I was able to stay on my parents insurance until I turned 26, I’m sure I would have taken more risks in my career choice,” Jordan said. “I have vision problems so eye insurance is very important to me. If I was able to have that through my parents insurance I may have thought more about freelancing or temporary jobs that would have been more beneficial in my ultimate career goals then the entry level job that I did eventually take.”

Under the new rule, children are eligible for dependent coverage regardless of their residency with or without their parents, their school status, whether or not they’re married or financially dependent. For employer plans that were in existence prior to the date of enactment, young adults can qualify for dependent coverage only if they’re not eligible for employment-based health insurance.

Jill M. Klingner, assistant professor of Healthcare and Operations Management at University of Minnesota Duluth said adding young, healthy insureds will balance the currently insured.

“(The Affordable Care Act) allows young people staring out to be creative with career choices,” Klingner said. “They are young and healthy so they should add healthy insured to balance the currently insured.”

The uninsured rate for those persons aged 18 to 24 increased from 28.6 percent in 2008 to 30.4 percent in 2009 according to the Census Bureau’s report. Young adults and recent graduates just starting their careers typically have lower wage jobs – holding part-time, entry-level or temporary positions.

The cost of insurance options such as COBRA (monthly payment of the entire premium that was paid as an active employee and the amount of contribution made by your employer, along with administration fees) is often too much for young persons. Student loans, rent, car payments and daily living expenses seem to be at the forefront of priorities when life isn’t spent worrying about impending accidents and illness.

It’s easier for 20-somethings to forego insurance when they’re all generally healthy and don’t have the money. However, is it also a fantasy that all young adults healthy? Chronic conditions such as arthritis, cancer, diabetes, heart disease and hypertension is found in 15 percent of young adults aged 18 to 29. And half of young adults are considered above a normal weight range, 24 percent qualifying as obese.

These same young adults are far more likely to go to the emergency room due to injury-related visits, more than any other age group. This poses a huge problem for the highest uninsured group in the country. According to The Commonwealth’s 2009 study, “More than one-third (35 percent) of all young adults surveyed, both insured, and uninsured, reported problems with paying medical bills, including having trouble making payments, being contacted by a collection agency because of their inability to pay bills, significantly changing their way of life in order to pay medical bills or paying off medical debt over time.”

The option of staying on one’s parents health plan seems to be the easiest option. However for those households who have been hit by the current economic turbulence the cost of keeping their children on their coverage may also pose a financial problem. Continuing to cover a child will raise family premiums on average.7 percent, according to the U.S. Department of Health and Human Services.

The New York Times reported, “The health department estimated that the average cost to cover each new enrollee would be $3,380 in 2011, $3,500 in 2012 and $3,690 in 2013.”

The current high unemployment rates have exacerbated the already difficult transition from childhood to adult responsibilities, added to that the high expense of their parents’ health insurance. Declines in median household incomes were experienced the most in households with young persons aged 15 to 24 down 4.4 percent.

Short term medical insurance may be the best bet for young adults with lower incomes. Payments as low as $30 per month with services such as preventative care options, prescription drug benefits and low deductibles can ease the pain of high insurance premiums. There are also limited benefit medical and hospital indemnity plans that cover more catastrophic conditions. All three of these health insurance plans are worth considering for a 20-something who can afford to pay for their own doctor’s visits they may have on occasion, but not the unknown hospitalizations or more serious care that could be financially damaging.