Obamacare facts: ACA health insurance choices for the young adult

President Obama signs the Affordable Care Act

President Obama signs the Affordable Care Act

The Affordable Care Act (ACA) health insurance exchanges will open for business on October 1, 2013. As a young adult, it’s up to you to make the kind of life-altering decisions that your parents made. One of those decisions involves choosing whether to buy health insurance or not. Also known as Obamacare, the plan may have you confused. Here are a few facts and ideas to help you understand and benefit from this new approach to health coverage.

Obamacare insurance requirement

Obamacare requires everyone to buy health insurance unless they are already covered by a plan from their employer or a government plan such as Medicaid or Medicare. Under Obamacare, parents can keep you on their family health insurance plan up to the age of 26. This rule applies even if you’re married, in school, claimed as a dependent, eligible for coverage on your employer’s plan or living away from home.

According to Michelle Singletary in her September 22, 2013 article for Roanoke.com titled, “Young adults can’t afford to tune out Obamacare insurance requirement,” you might want to consider buying your own insurance instead of staying on your parents’ plan.

Some reasons to consider buying your own health insurance through the new exchanges include:

  • your parents have to pay extra if you’re included on their family plan
  • your costs for health care may be higher even if you’re on your parents’ plan if you live in another state and use out-of-network providers
  • you may be young and healthy, but an accident or injury could put you in the poor house if you have no medical coverage

“I like to believe Millennials are smart enough to recognize they can’t afford not to get health insurance. It’s a gift that can keep them not only healthy but out of medical debt,” Singletary concluded.

How insurance works

Insurance is something like a bet. When you pay for insurance you’re betting that you’re going to need it to pay for medical expenses. The insurance company is betting that you won’t need it. So, if you buy health insurance on a Monday and then you’re in a car accident on that next Friday, you will be covered to the full extent of the policy even though you’ve only made one payment.

Insurance rates are based on the probability of the purchaser ever using the policy. This is why young people typically pay less for health insurance than older people. Younger people tend to be healthier and so file fewer claims.

Because you’re young and healthy you might think that it’s a waste of money to buy health insurance at all. You’d be wrong. All it takes is one accident and your plans for the future could be derailed by having to pay for a large medical bill.

For example, in her article, Michelle Singletary described how a tumble from a skateboard cost one 22-year-old $20,000 to care for his broken wrist.

So, you just wait until you need health insurance to buy it, right? Wrong. You can only buy insurance through the health care exchanges during the open enrollment period, which happens once a year.

In his August 19, 2013 article for the Washington Post titled, “Why Obamacare is good for young people,” Ezra Klein explained why you should buy your own health coverage.

“It’s a terrible mistake to think of yourself as having a fixed relationship to the health-care system. Health needs, income, and demographic profile all change over time — and they can change unexpectedly,” Klein said.

Health coverage for all has a long history

So what about those negative ads you might have seen on TV about Obamacare? Oddly enough, they are created by the same conservative groups that advocated the insurance mandate back in the 1980s. For example, in an October 1, 1989 article for The Heritage Foundation titled, “Assuring Affordable Health Care for All Americans,” Stuart M. described the Heritage plan for a health insurance mandate.

Noting that many states require drivers to wear seat belts and carry liability insurance, Stuart added, “But neither the federal government nor any state requires all households to protect themselves from the potentially catastrophic costs of a serious accident or illness. Under the Heritage plan, there would be such a requirement.”

Are you in or are you out?

Under Obamacare the cost of coverage for a young person will be about $34 per month. If you fail to buy insurance, then you’ll be subject to a penalty that amounts to $27 a month. The difference is $7. Would you be willing to bet on your continued health for the cost of a latte?

Do you think it’s a good idea to buy health insurance? Tell us about your experiences with the health care system in the comments below.

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