What Millennials Need to Know About Health Insurance
Here's how to choose the most affordable plan for you
If you're a Millennial, you're probably as healthy as you'll ever be, and you're definitely young at the time of this writing. Does this mean you can forgo health insurance? Decidedly not. Even healthy people develop ailments, catch diseases, and get into accidents. The upside is, as a young and healthy person you'll find the cost of buying insurance more affordable than it is for older Americans.
Most millennials use the health care system differently than older consumers. Those differences can be important factors in choosing a health care plan. Typically, your generation is cost-conscious, and more likely to ask about the price of treatments before getting them. They're less likely to use primary physicians for nonemergency care, instead opting for retail clinics, urgent care centers, or emergency rooms.
If these differences apply to you, take them into consideration when deciding what kind of coverage to buy.
Get a Sense for Your Typical Usage
Start by taking a look back at the prior year to get a sense of your typical medical needs: How many times did you go to the doctor, a clinic, or an emergency room? How many times did you want to go, but didn’t because of cost concerns? How much did you spend on prescription drugs, and do you take any on an ongoing basis?
Now consider what you might need in the next year. Perhaps you’re thinking about starting a family or getting physical therapy for your hamstrings.
Be honest with yourself. Millennials are more likely than most to ignore medical problems. According to research from the Transamerica Center for Health Studies (TCHS), nearly half of Millennials have minimized health care costs by skipping, delaying, or stopping care early.
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. “Health care 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. Factor in copays, the flat fees you pay for services before the insurance kicks in, and coinsurance, the percentage you pay after you meet your deductible. Out-of-pocket maximums matter, too.
Set Your Budget and Comparison Shop
As with any new expenditure, calculate how much you can pay each month, and then ask yourself how much you’re willing to pay.
Health insurance costs have been highly volatile in recent years. You can get an idea what it will cost you to get coverage now by comparing offerings at the national healthcare exchange, Healthcare.gov, or at a private online exchange such as eHealth. (Your state may have its own healthcare exchange, but you can start with Healthcare.gov in any case.)
Given your age, and assuming you're fit, going for a high-deductible plan will help you keep your premium costs down. "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.”
If you're under age 26, current law allows you to stay on your parents' policy, but that doesn't mean it's the best option available to you. Do your due diligence to find the best price by comparison shopping all of the options available to you, Hector De La Torre, executive director for TCHS, recommends.
When 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, it will be the most cost-effective plan you can get. But these days, some employers are passing off so much of the cost to employees that you might do better on your spouse’s plan or by shopping independently.
If you don’t have employer-based coverage, or you may be eligible for a subsidy, the Healthcare.gov exchange or eHealth.com can serve for comparison shopping.
Look for Convenience
Millennials favor immediacy and convenience, says Robin Gelburd, president of FAIR Health, a not-for-profit organization seeking transparency in health care costs. They are more likely to be self-employed or freelance workers, and less likely to have a regular primary care physician. They tend to prefer to use retail clinics, urgent care centers, and emergency rooms.
If this is your preference, look for a plan that covers those costs. You also can check for plans that offer a form of telemedicine or electronic communication for minor ailments. Industry leaders include Teladoc, Doctor on Demand, and American Well.
Factor In Prescriptions
Don't forget prescription coverage, especially if you use an expensive medication regularly. You can save a significant chunk of change if your prescriptions are covered by your plan.
Nate Purpura of eHealth notes that about two-thirds of individual market health insurance plans don’t cover prescription drugs until after you hit your deductible. If you’re spending more than $50 a month on prescriptions, it’s worth looking into plans with lower deductibles.
If you’re shopping for the lowest possible monthly premium, you’ll find plans described as "catastrophic" on the exchanges. Be aware that, as they state, they won't cover much short of a catastrophe.
Don’t Go Without
At this writing, the federal fine for going without health insurance is expected to disappear in 2019. But that fine was by no means the only risk to going without insurance. At best, you'll be gambling that your general health will stay good. You're also likely to ignore minor health problems in hopes that they'll go away. It's all too likely they'll get worse, and much more expensive to treat.
With Kelly Hultgren