Turning 25 and transforming into someone who can legally rent a car used to be the last major milestone associated with your twenties. No longer. Now, your 26th birthday (or the end of the accompanying calendar year) is your last rite of passage as you are now no longer able to enjoy the sweet benefits that come from being a dependent on your parents’ health care plan. If this level of adulting gives you pause, fear not—it’s not quite as complicated as it sounds. Plus, you have options!
Here’s everything you need to know as your rite of passage approaches.
When do I need to get my own plan?
Depending on which state you live in, you may need to secure your new health insurance either by your birth month or the end of that calendar year. You will have 60 days from the moment you lose coverage to obtain your personal policy.
Why is it important?
Even if you’re in good health, insurance is crucial for protecting your financial future. Two thirds of personal bankruptcies in the U.S. are because of medical bills, which can be both unexpected and outrageously expensive. If you need more immediate incentive, going without health care for more than three months will result in a tax penalty. The most important reasons, though, are self-respect and self-care. Life is unpredictable, and taking care of yourself (and your loved ones) means taking a broad, forward-thinking view.
How do I do it?
If you have a full time job, your employer is the best place to start. Most people with health insurance get it through an employer, so talk to HR about enrollment (when, what, how) as early as possible to better avoid an insurance-less period during the changeover.
If your job doesn’t offer health care, individual plans on Healthcare.Gov or specific state healthcare marketplaces are a great option. Start by heading to Healthcare.Gov to explore your options and get a quote. This process is informed by your estimated income for the upcoming year, so make sure you have that information handy. If you’re not currently making a ton, you could qualify for alternatives like Medicaid or other plans at no or low cost to you.
What should I look for in a plan?
Whether you’re looking at options from your employer or on the marketplaces, you’ll want to keep a few things in mind: cost sharing, your total costs and expected utilization, and the plan and network types. Ultimately, your goal is to make sure that the plan you choose accommodates your expected healthcare needs. Most of these details are included in plan summaries, and you should be able to find all of these in the full plan details.
With any health insurance plan, the cost of healthcare is split between you and your insurance provider. The portions that you pay include your premium and out-of-pocket expenses. The premium is the amount you pay the insurance company every month, even if you don’t use any health services. Your out-of-pocket costs include your deductible (the fixed amount that you pay before your insurance kicks in, including copays and coinsurance) and copayments and coinsurance (payments you make each time you get a medical service after reaching your deductible). Premiums and out-of-pocket expenses usually work opposite of each other, meaning the higher the premium, the lower the out-of-pocket expenses and vice versa. This impacts your total healthcare costs.
When comparing plans, think about your expected healthcare costs and needs. The past isn’t a perfect indication of the future, but it’s a good starting point for planning ahead, so have a think on your healthcare needs over the last year or so. That doesn’t mean you shouldn’t look ahead, though. Will you need or want to visit a specialist, for example?
If you are generally healthy and rarely see a doctor, a plan with a lower premium and higher out-of-pocket costs might fit your needs. If you see a provider frequently, need emergency care often, manage a chronic condition, plan to get pregnant or have a planned surgery, you might consider a plan with a higher premium but lower out-of-pocket costs.
Plan and network types
Plan types are important because they determine what doctors, specialists, and care providers you can see and how. Some plans allow you to see almost any provider, while others may limit your choices or charge you more to use providers out of their network. If you have an existing relationship with a primary care doctor that you’d like to keep, or if continuing to receive your birth control through The Pill Club is important to you, make sure the plan you're considering covers those providers.
Here’s a helpful guide to health plan alphabet soup:
- EPO - Exclusive Provider Organization: This is a managed care plan that covers costs only when you use doctors, specialists, hospitals, and other health services within the plan’s network (except in an emergency).
- PPO - Preferred Provider Organization: This type of plan preferences providers in the plan’s network. You can still use doctors, hospitals, and providers outside of the network, but you’ll pay more than when seeing in-network providers.
- HMO - Health Maintenance Organization: These types of plans often provide integrated care and focus on prevention and wellness, and will usually limit coverage to care you receive from doctors who work directly for the HMO. It generally won’t cover non-emergency care out of network.
- POS - Point of Service: These plans have you pay less when you use in-network care providers and will require you to get a referral from your primary care doctor in order to see a specialist.
As the saying goes, information is power. Knowing when, why, how and what you need to do to get health insurance as you come up on the big 2-6 is important for both your physical and financial health. The good news is, you’re not alone in this journey. And with a little help from us, you have everything you need to #getcovered.
Now, sign up! Head to healthcare.gov to apply before August 15th.