Why Millennials Need to Think About Health Insurance Differently

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Millennials do a lot of things differently from the older generations. And health care is no exception.

As a general rule, millennials are more cost-conscious, meaning they’re more likely to inquire about the cost of treatments and coverage before receiving them. And that tendency manifests in markedly different approaches to receiving medical care. For instance, millennials are less likely to turn to a primary care physician for non-emergency care, instead opting for retail clinics, urgent care centers, or emergency rooms.

 And they’re also more likely to skip care altogether: According to research from the Transamerica Center for Health Studies (TCHS), nearly half of millennials have minimized healthcare costs by skipping, delaying, or stopping care, instead attempting to solve medical problems on their own.

And because this generation consumes medical care differently, they also need to think long and hard about how they choose their health insurance.

So if you’re a millennial, you should start by taking a look back at the prior year to get a sense for your typical usage: How many times did you go to the doctor, to a clinic, to an ER? How many times did you want to go, but didn’t because of cost? How much did you spend on prescription drugs, and are there any you take on an ongoing basis? Are there any other medical needs or conditions that are top of mind — perhaps you’re thinking about getting pregnant, or getting physical therapy for your hamstrings?

Once you’ve finished that self-assessment, here’s what you need to do.

Know the Terminology

“The big thing for millennials — especially for first time shoppers easing out of their parent’s coverage — is really understanding the key concepts that take up costs,” says Jennifer Fitzgerald, CEO and co-founder of PolicyGenius, an independent online insurance marketplace.

“Healthcare is complicated… the premium you pay isn’t the whole story.” You need to understand the basic differences between high deductible plans (perhaps with HSAs) and PPOs. It’s also important to factor in copays (flat fees you pay for services, like appointments and medications) and coinsurance (a percentage of the cost for services you pay for, usually after you meet your deductible). The same goes for premiums, deductibles and out-of-pocket maximums.   

Set Your Budget and Comparison-Shop

As with any new expenditure, calculate how much you can afford to pay each month — and then ask yourself how much you’re willing to pay. For this open enrollment season, monthly premiums for ages 18-24 are averaging $219, according to eHealth, a private online health insurance exchange; for ages 25-34, it’s $288.

Generally speaking, “If you’re in good health now and don’t have any future procedures planned, then go for a higher deductible,” says Fitzgerald. “If not, then go for the lower deductible.” And no matter where you fall on the millennial age spectrum, do your due diligence for finding the best price by comparison shopping all of the options available to you, says Hector De La Torre, executive director for TCHS.

In other words, just because you can be on your parent’s plan until age 26, doesn’t mean it’s the best option available to you. 

Understand How Pre-26 and Post-26 Are Different

If you’re under 26, staying on your parent’s plan might be cheaper than switching to your employer’s. If you’re in college, it might be cheaper to opt for your student health plan (most four-year schools have one). But those are generalities: You won’t know unless you run the numbers. After you turn 26, you have 60 days to get your own insurance coverage if you’re still on your parent’s plan. Generally, if your employer offers one, that will be the most cost-effective solution. But some employers are passing off so much of the cost to employees, that you might be able to do better either on your spouse’s plan (if you have access to one) or by shopping independently.

 Just know that if your employer does offer health insurance, you are not eligible for subsidies on the exchanges, and you’ll have to pay sticker price. And if you don’t have employer-based coverage, then the exchange can be your baseline — and you can compare it with the traditional insurance market (via a broker or a company outside the exchange like eHealth.com).

Look for Convenience

Millennials favor immediacy and convenience, says Robin Gelburd, president of FAIR Health, a not-for-profit organization seeking transparency in healthcare costs. Between unconventional jobs (i.e. freelance positions or working outside the usual “9-to-5”) and the absence of either creating or maintaining strong relationships with primary care physicians, she says the trend to favor retail clinics, urgent cares and emergency rooms isn’t surprising. If you visit these facilities often — or going to them is your preference — then look for plans that cover them. Also look for plans that offer a form of telemedicine, or electronic communication (via phone, email and webcam) with doctors for non-emergency situations (think colds, flus, rashes, etc.). For an average of about $40-50, you can see a doctor — and even get prescribed medication — from the comfort of your home or office. A few industry leaders include Teladoc, Doctor on Demand and American Well.

Factor in Prescriptions

Similarly, urgent care junkies should focus on prescriptions. From a cost perspective, understand that you can save a significant chunk of change if the prescriptions you take regularly are on the formulary of your plan (that is to say, they’re covered). Formularies don’t change all that often, so factoring that into your decision is a smart move, says Fitzgerald. But, as Nate Purpura of eHealth explains, you should also understand that around two-thirds of individual market health insurance plans don’t cover your prescriptions drugs until after you hit your deductible. Therefore, if you’re spending more than $50 a month on prescriptions, it’s worth looking into plans with lower deductibles.

Again, if you’re shopping for the lowest monthly premium, you’ll likely be presented with Bronze or Catastrophic on the exchanges. But with costly prescriptions in mind, you’re usually better off signing up for a Silver plan to get them partially or completely covered.

Whatever You Do, Don’t Go Without

Don’t think the cheapest option for health insurance is going without it. Under the Affordable Care Act, skipping health insurance coverage means incurring a hefty fine: The fee for not having health insurance in 2016 was $695, or 2.5 percent of your income, whichever was higher. And that flat-fee penalty will be adjusted for inflation for 2017. While the Trump administration could wind up repealing the health insurance requirement along with the rest of Obamacare, for now that penalty remains in place.

And there are further financial risks from going without insurance. Sacrificing your health to save money now could lead to even greater problems, with even bigger price tags, down the road. For example, if you ignore the cavity and the $170 it might cost to fill today, then you’re putting yourself at risk for a root canal later, which could run you upwards of $1,000. And while you might feel healthy and invincible in your 20s, know that a catastrophic illness or injury can happen to anyone — and if it happens when you don’t have insurance, you run the risk of decimating your finances and going deep into medical debt.  

With Kelly Hultgren