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What Obamacare Means for 20-somethings

The Affordable Care Act (aka Obamacare) is already changing much about how we buy health insurance and the coverage it provides. But whether you currently have insurance or not, what does Obamacare mean for you?

For 20somethings looking for health insurance, Obamacare may make finding a plan easier, if not cheaper.No doubt you’ve been hearing about all the ruckus surrounding the Affordable Care Act, aka Obamacare. As of October 1, many Americans have the option of purchasing individual health insurance  for the upcoming year at healthcare.gov.

By March 31, 2014, the government is expecting you to have health insurance, even if you’re not working, barely making enough to put gas in your car, or your employer doesn’t offer insurance.

Far too many 20-somethings fall into these three categories. One in three 18-29 year olds are working part time, positions that don’t pay much and rarely offer employer-sponsored health coverage. A whopping 16 percent of people aged 18-29 are officially unemployed. And an estimated 1.7 million more young adults simply aren’t counted in government figures because they’ve given up even trying to find a job.

The situation isn’t much better for young adults who are lucky enough to work full time. In 2009, half of 19-29 year olds were working 40 hours per week, but still couldn’t afford the cost of health insurance.

If there was ever a group of people who should see a doctor for antidepressants, only  – without insurance — the shrink’s bill is too damn high. As a result, young adults have just been suffering quietly. A 2011 study found that 60 percent of uninsured adults between the ages of 19 and 29 didn’t get the healthcare they needed because of the cost.

But those days are ending. “People between the ages of 18-34 will be the biggest beneficiaries of the new healthcare law,” says Christina Postolowski, a senior policy analyst at Young Invincibles, a national organization that advocates for adults between the ages of 18 and 34.

Here, she explains why, and how much you can expect to pay for health insurance in 2014.

If you are under the age of 26 and earn less than $15,856, you may be eligible for Medicaid.

Prior to the Affordable Care Act, young adults could not be covered by their parents’ insurance plans after they turned 19. So if you were young, cash poor and not in college (many universities offer health plans), you could either pay full price for doctor’s visits, medication, hospitalizations and procedures, or wallow in your illness.

In 2010, when certain parts of Obamacare went into effect, young adults under the age of 26 could legally stay on a parent’s insurance plan. This way, young adults who are struggling to get on their feet still have access to healthcare.

But what if your parents don’t have health insurance? Or you’re over the age of 26?  And you’re not making enough money to foot your own insurance bill?

Starting January 1, any adult who makes less than $15, 856 per year will be eligible for Medicaid, a government insurance program. “This is perfect for young adults because many of them are lower income,” says Postolowski.

There’s just one hitch: states don’t have to comply with this part of the federal law. Some states are opting to limit Medicaid assistantship to individuals who earn less than $11,490 per year.

If you live in one of these states, or earn more than the Medicaid salary cap, don’t fret. You have other options.

Health insurance exchanges can help you find affordable, high-quality coverage.

At healthcare.gov, those who aren’t covered by Medicare or employer-sponsored health insurance can compare and purchase coverage. This post explains some of what you need to know about buying health insurance on your own.

Sure, you’ll still have to pay something for health insurance, but the amount should be less than it used to be. And these new plans will have more benefits than low-cost plans used to (like prescription drug and mental health coverage). “Women can no longer be charged higher rates than men,” adds Postolowski. “And you can’t be denied because of chronic health conditions.”

As long as you earn less than $45,960, you may also qualify for financial assistance, in the form of tax credits, for a portion of your health insurance costs. Postolowski recommends using this Kaiser Family Foundation calculator to estimate what you may end up paying for healthcare in the new year.

For instance, the average single, non-smoking, childless 28-year-old American who earns $25,000 per year can get a silver plan for $2,756 per year. But this American would also receive a tax credit of $1,027, meaning the yearly premium will really only be $1,729. To save even more money, this Sickly Citizen could purchase the bronze plan for $1,257 per year.

What’s the difference between bronze and silver plan? A bronze plan means you’ll have a lower yearly premium but a higher deductible, the amount of money that the insured must pay before an insurance company will pay on a claim, than someone with a silver plan. There are also gold plans available, which have higher yearly premiums, but lower deductibles.

Note that the example here is a national average.  Your costs will depend on where you live. “Costs vary from state to state and even within states,” says Postolowski.

Still don’t want to pay that much? Consider “catastrophic” coverage.

People under the age of 30 can also take advantage of catastrophic coverage, which was originally designed to insure against the unthinkable – a major accident or illness.

Under the new law, these types of policies must also include free preventative screenings, like pap smears and cancer screenings, and three free primary care visits.

So if you usually only see a doctor for a yearly physical and the occasional sore throat, this may be a good option. According to the Kaiser Family Foundation, people in their 20s may pay 29 percent less for a catastrophic plan than they would for a bronze plan.

The downsides? If you need medical care beyond what your Primary Care Physician can provide, your deductible of $6,530 will be much higher than someone who opted for bronze level coverage. “You also can’t use any tax credits for catastrophic coverage,” says Postolowski. “So you might be able to get better insurance with a silver or bronze plan.”

Confused? There’s help.

At first glance, the new law can seem overwhelming. But you can’t just bury your head in the sand and keep on living without health insurance (plus, you’ll get sand in your eye and may need to see a doctor to flush it out).

Beginning next year, if you don’t have any health insurance, the government will fine you up to 1 percent of your yearly income or $95 per person for the year, whichever is higher.

You’ll only pay more as the years tick by. In 2016, the fee will be 2.5 percent of income or $695 per person, whichever is higher.

To learn more about your options, visit healthcare.gov, call the government help center at 1-800-318-2596, or talk face-to-face with an enrollment helper in your area.

What questions do you have about health insurance?

About Patty Lamberti

Patty Lamberti is a freelance writer and Professional-in-Residence at Loyola University Chicago, where she teaches journalism and oversees the graduate program in digital media storytelling. If she doesn't know something about money, you can trust she'll track down the right people to find out. You can learn more about her at www.pattylamberti.com. And if you have any story ideas, or questions about money etiquette that you'd like her or an expert to answer, email her at moneymannersqs@gmail.com.

Comments

  1. The folks who live in a state that is not expanding Medicaid may be left out in the cold if their income falls into a narrow range: too much to qualify for Medicaid, not enough to qualify for subsidies.

    The subsidies begin at 100% of FPL. Someone earning less than that amount pays the full price. It’s a weird quirk in the law resulting from the Supreme Court ruling last summer. The Kaiser foundation estimates that five million people will fall into this group.

  2. This has to be a joke. What about the under 30 people who make more than $45K? I am barely over that threshold and an extra $1,257 per year (for the cheapest plan–LOL) is pushing it. (Also isn’t that after a tax credit which I’m not eligible for? So I would be paying more anyway??)

    Let’s be serious here–the whole success of this plan depends on the people in my demographic (generally healthy mid 20 year old) subsidizing the older people who get sick a lot more. And then the whole affect of the republicans leveraging any law (read: debt ceiling) against putting this into effect…Washington is just trolling us right now.

  3. Let’s be realistic. Do we really expect people to dig in their pockets and come up with this money for healthcare. People in there 20′s will have a difficult time paying and the price of insurance only increases with age. It looks to me like the government will be mailing out a lot of fines next year. God Bless America!