A Guide for Recent Grads: Should You Stay on Your Parent’s Health Insurance?

As if graduating from college and entering adulthood isn’t a big enough change, people in their early 20s also have to shoulder decisions about their health care coverage. And this usually means lots of questions: Why should you even have health insurance? What kind of coverage is right for you? Should you just stay on your parents’ plan?

While it might be tempting to just ignore the issue or ask a friend what to do, each person has different needs when it comes to insurance. Here are some frequently asked questions we hear from recent grads:

Should I stay on my parent’s health insurance?

If you’re wondering whether you should stay on your parent’s health insurance, the first question to ask yourself is simple: What are your alternatives? Most recent grads who choose not to stay on their parent’s plan get health insurance through:

  1. Enrolling in their employer-sponsored insurance
  2. Buying their own insurance through HealthCare.gov or a private insurer
  3. Applying for Medicaid

There’s no “best” option among these options – only a best option for you. Not sure how to evaluate the differences? Here are a few factors to consider:

  • Convenience: If you live far away from your parents, finding local doctors in their network can sometimes be challenging or costly.
  • Privacy: You also might not want your bills and claims to be mailed to your mom and dad, or visible to them online.
  • Benefits: All health plans are not created equal. You might want your own policy if you go to the doctor often (you may want a plan with more coverage and benefits), regularly see a specialist (you may want a PPO so you don’t need to worry about referrals) or know you’ll need specific treatments or medicines to be covered.
  • Cost Differences: If you’re not worried about any of the factors above, it may come down to cost for you. What are you or your parents’ paying to keep you on their plan? What is available through your employer? What would you pay if you enrolled in an individual plan?
  • Retirement: Are your parents retiring soon? If they are and you’re on their plan, having a discussionabout the next phase of their health care would be a good idea. Depending on their financial status and whether they’ll enroll for Medicare soon, it may be highly beneficial (financially and for your own peace of mind) for you to invest in an employer-sponsored plan or an individual plan through the health insurance marketplace.

Does my employer offer benefits? And if I sign up, can I go back on my parent’s plan down the road if I want to?

Have a conversation with your employer to learn about your health insurance options. If they offer coverage, they’ll be able to help you evaluate your choices, understand what costs you’re responsible for and sign up. You can always go back onto your parents’ plan until you turn 26. You will, however, have to wait until the open enrollment period to sign back up for it.

If I want to buy my own health insurance, what do I do? 

There are specific times during the year when you can sign up for individual health insurance through HealthCare.gov or a private insurer, like Blue Cross Blue Shield of Michigan or Blue Care Network. The 2016 open enrollment period runs from Nov. 1, 2015 to Jan. 31, 2016. To explore your options, visit bcbsm.com or call a health plan advisor at 855-237-3501.

I’m healthy, can’t I just skip health insurance for a year or two? 

If you’re uninsured for more than three months over the course of a year, you will get hit with a penalty when you file taxes. The penalty is two percent of your annual income or $325, whichever is higher, and these fees are subject to increase in 2016.

You’ll also be more likely to skip out on preventive care, and end up paying more when you do go the doctor for simple things like cavity fillings or an eye exam (because insurance companies negotiate with doctors to bring down the costs of services).

And then there’s the fact that not having health insurance is a huge gamble. You never know when a serious and costly accident might happen, resulting in huge out-of-pocket medical bills. The average emergency room visit costs $2,000, helping to explain why medical expenses cause 62 percent of all personal bankruptcies.

Are there any other options available to me?

Actually there are. In addition to your parents’ plan and getting something through the Marketplace, there is Medicaid and Catastrophic coverage.

  • Medicaid is an option if your income is below a certain amount. There’s also something called the Healthy Michigan Plan if you don’t qualify for Medicaid, but your income is too high to receive financial help from the government.
  • Catastrophic plans are only available to people under the age of 30. They have a high deductible but low monthly payments, meaning they are good if you want free preventive care guaranteed through the Affordable Care Act as well as coverage in case something major happens. You’ll still be responsible for your high deductible, but at least you won’t be stuck with the entire hospital bill.

Are you a millennial looking to learn more about healthcare coverage? You may also want to read the following blogs:

 

 

Photo credit: Evonne

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