Health Insurance Tips for Recent College Grads

Recent college grads have a lot to figure out as they make the transition into the “real world”. There’s the whole question of how you’re going to make a living, where you’re going to live, and how you’re going to pay for everything on your own. Health insurance may fall the bottom of the priority list because A. You don’t have a lot of extra money laying around, and B. You’re a pretty healthy 20-something-year-old.

Our Health Insurance Tips for Recent College Grads are designed to help you understand the risk associated with not being insured, your health care options and responsibilities, and how to get the coverage you need.

Tip #1: Know What the Risk Is Going Uninsured- You’re risking a lot more than just your health when you skip out on health insurance.

The most obvious risk is having to pay thousands of dollars in health care in the case of an accident or serious illness.
Another risk is that you’re less likely to take care of minor health issues without insurance, and they can progress into bigger problems. It’s also likely that you’ll avoid preventive care, due to the costs involved.
A new risk is the tax penalty you’ll face if you remain uninsured. Under the Affordable Care Act, the penalty this year is $95.00, or 1% of your yearly income, whichever is greater. Landing that dream job with a big paycheck could mean hundreds of dollars in tax penalties next April. Luckily, being uninsured just after graduation doesn’t mean you’ll automatically face a tax penalty. Under the ACA, penalties are triggered when you go uninsured for three consecutive months in the same year.

Tip #2: Know What Options are Available- Recent graduates actually have a lot of choices when it comes to health care coverage.

Keeping Mom and Dad’s health plan. Under the ACA, adult children can stay covered under their parent’s health insurance policy until age 26. However, just remember that your parents are not obligated to keep you on their plan, and it may cost them more to do so. Plus, if you live in another city or state, your plan’s access to network providers may be limited or even non-existent. You can also stay on your parent’s plan through COBRA after you age off. COBRA is allowed for up to 36 months, but you’ll have to pay the full premium yourself. It’s also often not the most cost effective option available.
Keeping your student health insurance. Most college health plans actually cover you until the end of the summer. If you still don’t have another option by the end of the summer, see if your student plan has a continuation option. Many plans have an additional 90 day continuation option, but make sure you understand how the price and your benefits will be effected. Some continuation plans do not include all of the benefits you received as a student.
Employer-based health insurance. This is how the majority of Americans get health insurance. If you’ve secured a job after graduation, make sure you know all the ins and outs of your chosen plan. Make an appointment with your human resources department to make sure you fully understand and are taking advantage of the health benefits you’re offered. If you’re still looking for a job, it’s a good idea to take the benefits package into account. A job with a great health insurance plan could be more beneficial financially, than a higher paying job with less benefits.
Individual health insurance. The ACA established an annual “Open Enrollment” period for individuals to buy major medical health insurance. This year’s open enrollment ended March 31, and it won’t open again until Nov. 15 of this year. But you may qualify for a “Special Enrollment” period, if you experience a qualifying life event. One such event is losing your eligibility for student health coverage by graduating, or aging out of your parents’ health insurance. Marriage, divorce, and having a baby are all qualifying events, as well as loss of health insurance not related to non-payment.
Short term insurance. If you don’t have coverage through a job and you don’t qualify for a special enrollment period for individual health insurance, a short term plan can be a great option. Even if you did land a job, your employer-based insurance might not kick in for a period of time, and short term insurance could cover you in the meantime. Short term insurance can cover a period of 30 days to 12 months, and often has very low premiums. Just remember that this temporary coverage is designed as a safety net against astronomical medical costs. They may not cover preventative care, pre-existing medical conditions or prescription drugs. It also may not be enough coverage to avoid a tax penalty.

Tip #3: Take Advantage of Health Care Reform- Several components of Health Care Reform can help recent college graduates.

If you experience a qualifying life event, (Remember, losing your student coverage is one such event!) you may enroll in coverage outside of open enrollment.
Find out if you qualify for a government subside to help alleviate your health care costs. Your projected income for the year must be no more than four times the federal poverty level, or about $46,000 for a single person. Work with a licensed agent or a federal health exchange to see if you qualify for help, and don’t forget to check back in with them if your income changes. If you end up making more than anticipated this year, you may have to pay back some or all your subsidy come tax time.
Most plans now provide up-front coverage for certain preventative care services. That means you don’t pay for those services, even if your deductible isn’t met.

Tip #4: Consider All Options When Pricing Health Plans- Don’t just choose the plan with the lowest monthly deductible.

When gathering quotes for health insurance, keep in mind that the plan with the lowest monthly premium may end up costing you a lot more than you think. Pay attention to the annual deductible you’re required to meet before your coverage kicks in.
Remember that copayments must be paid every time you visit a provider, and you can’t anticipate how often you’ll need to see a provider in any given year. In the individual marketplace, plans are ranked by “metal” levels. If you’re healthy and you don’t have any regular prescriptions, a Bronze plan may fit you best. It’ll have one of the lowest monthly premiums, but make sure you’d be able to pay the deductible in the case of an emergency. Platinum plans are designed to cover 90% of your medical expenses, but the monthly premium may not be easy to pay as a new graduate.
Make sure you budget in only your monthly premium, but any other costs associated with health care (such as co-pays, prescriptions, and the full deductible in the case of an emergency).

Tip #5: Shop Around- As with any large and/or ongoing expense, it’s important to make sure you’re getting the best deal, with the best benefits.

If you think you qualify for a special enrollment period and/or a government subsidy, check out your state’s health insurance exchange. However, keep in mind that not all health insurance carriers are on the exchange. All major medical plans are still required to be ACA approved, on or off the exchange. If you don’t qualify for a government subsidy, you may actually be able to find a better plan somewhere else.
For free quotes from a local, licensed agent who works with both on- and off- exchange carriers, click here. Our experienced agents can guide you through your options and make sure you’re getting the best plan, at a price that fits your new budget.