Health Insurance for Twentysomethings

My daughter graduated from college last month, and I’ve kept her on my health insurance because she doesn’t have a job with benefits. Is that the least-expensive way to buy her health coverage? Will those rules change next year?

Ever since the health care law let young adults stay on their parents’ health insurance policies until age 26, graduating from college has no longer caused the mad scramble for health insurance that it did in the past. Keeping your child on your policy is generally the best deal, although there are exceptions. For example, if you use an HMO with a limited network and your daughter lives in another city that isn’t covered by the network, she may want to consider buying a policy on her own. Also, if you aren’t covering other children on the policy, it’s a good idea to compare the price of family coverage with the price you’d pay if it were just you (or you and your spouse) on the policy. If there’s a big price difference, see what it would cost for her to buy her own policy. You can get price quotes from many companies at eHealthInsurance.com, or get information about policies available in your state at HealthCare.gov.

If your daughter is healthy, she may be able to buy a policy on her own for around $100 to $200 per month (except in a few high-cost states, such as New York). She can reduce her premiums by raising the deductible. But the rules and prices will be changing soon. Starting in January 2014, insurers will no longer be allowed to reject anyone for coverage or charge them more because of their health. That’s a boon for people with health issues who couldn’t find coverage before, but healthy people are likely to pay more than they do now. Young people may also get less of a break than they do now because the law sets limits on how much insurers may charge older buyers. For example, premiums for a 64-year-old can be no more than three times as much as they are for a 21-year-old.

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However, many young people who buy insurance on their own are also likely to qualify for tax credits to help pay for their premiums. A study by Avalere Health estimates that about two-thirds of young adults (age 30 or under) who are currently uninsured or have nongroup health insurance will be eligible for the subsidies. The subsidies are available for individuals who buy health insurance on the new state exchanges who earn less than 400% of the poverty level (about $46,000 for an individual and $94,000 for a family of four in 2013). See How to Qualify for a Government Health Insurance Subsidy for details.

If your daughter buys her own policy now, before the law changes, she may be able to keep it at today’s rates for another year. Some states may allow plans purchased in late 2013 to last a full year before being brought into full compliance with the 2014 provisions of the Affordable Care Act – possibly with the lower rate locked in for that time period, says Carrie McLean, director of customer care for eHealthInsurance.com. In other states, however, people with existing coverage may be switched to ACA-compliant plans as of January 1, 2014. If that happens, her premiums may go up, but she may also be eligible for a subsidy if she buys a policy on the exchange.