Some birthdays bring along exciting privileges (think of those 21st celebrations), but 26 is likely not one of those. Instead, turning 26 means aging off your parents’ health insurance, leaving you with the responsibility of buying your own plan. The task can undoubtedly seem daunting: should you purchase a high-deductible plan or a low one? What even is a deductible? Fortunately, learning the basics of health insurance can help first time buyers select a plan that works for them.
Learn Key Insurance Terms
Imagine following a recipe where you’ve never heard of any of the ingredients. The end result might be quite disastrous! Learning about health insurance plans is the same way. There is a set of key terms that you’ll want to know to understand your coverage:
- Premium
- Copayment
- Deductible
- Coinsurance
- HMO Plan
- PPO Plan
- HSA
Familiarize yourself with each of these before beginning your search. You’ll be a step ahead to understanding what coverage you need and what you’ll be paying each month and at doctor’s visits.
Determine the Coverage You Need
Before shopping for plans, consider conducting a self check-up to determine how much coverage you need and can afford. If you’re relatively healthy and tend to only visit your doctor once or twice a year, a high-deductible plan is probably best for you. You will pay more at doctor’s visits, but your monthly premium will be less. If you tend to visit the doctor frequently or have a chronic health condition, you’ll likely be better with a low-deductible plan. Just be sure to factor the higher premium into your monthly budget.
When searching for health insurance, finding adequate coverage should be your top priority. Rather than jumping to the plan with the lowest price tag, take time to find insurance that will meet your healthcare needs. While monthly premiums are a large portion of what you will pay for insurance, be sure to take into account the deductible, co-pays, and co-insurance associated with the plan. Those additional items can quickly add up to a large bill.
Searching for Plans
Once you have an idea of what type of coverage you need, you can begin searching for a plan. Many millennials will obtain their health insurance through their employer. Most employers pay a portion of their employees’ premiums resulting in lower average costs. However, if your job does not provide insurance, you can shop for plans in the rapidly growing marketplace. You can look into your state health exchange, a private exchange or directly from an insurer.
Look beyond the price tag and determine exactly what you get with your plan. While prices might be the same, some plans might provide more options and support for covered individuals. Additionally, be sure your preferred doctors accept the plan. If your physician is not in-network, visits can be quite expensive.
Find Ways to Save
Many millennials likely qualify for federal subsidies. Subsidies, or a form of government aid, are based on the money earned during the year you receive the subsidies: be sure not to underestimate your income or money will have to be paid back at tax time. Subsidies may include an advance premium tax credit, cost-sharing reductions, or Medicaid.
If you choose a high-deductible plan, consider getting a health savings account, or HSA. This type of account allows you to put money aside pre-tax to use for healthcare purchase. HSAs allow you to pay for out-of-pocket expenses as well as lowering your tax bill.
The Basics of Health Insurance for Millenials
Finding and purchasing health insurance is not a fun part of “adulting.” However, think of insurance as a financial security net. Even if you’re young and healthy, you could end up with thousands of dollars of medical expenses in the event of an accident or new health issue. Additionally, you’ll be hit with a tax penalty if you fail to buy coverage. Rather than put it off, find out about your health insurance options today. Learn the basics of coverage to find a plan that works best for both your health and your wallet.
