Health Insurance for Young Adults: Which Are Budget-Friendly?

Health coverage provides you with financial protection from any costly unexpected, or unwanted conditions. It also gives you peace of mind and extra comfort knowing you’re financially prepared for whatever happens.

The problem is it’s hard to take the first steps without funds, especially if you’re young and broke. But we’ve got you covered. Here are a few budget-friendly health plan options for every young adult. 

Parent’s Health Plans

One of the simplest ways young adults can save money from health insurance costs is to stay on their parent’s insurance plan. The Affordable Care Act (ACA) allows parents in some states to keep their kids on their insurance until they’re 26.

According to the US Department of Labor, you can join or stay on your parent’s health insurance plan, even if you’re: 

• Already married;
• Still a student;
• A full-time worker; or 
• Not living with your parents or counting on them for money.

If your parents already have other dependents (e.g., other parent and sibling) on their plan, keeping you on won’t usually cost them more. In this case , staying on your parents’ plan makes more financial sense since you won’t have to pay your own premium. 

One consideration you should consider is whether the doctors and hospitals in your parent’s plan’s network are near you. If they aren’t, you’ll likely only get care from an out-of-network provider and pay for it out of your pocket.

In this case, getting health insurance on your own or through your employer will be better. Doing so will help you avoid higher out-of-pocket costs, especially if you can’t find a network provider. To save more, seek help from the Health Insurance Marketplace. They offer affordable options and even help you pay for your own health insurance plan, depending on your income. 

Employer-Sponsored Health Insurance

If you’re working full-time, opt for your company’s health insurance rather than getting an individual plan. Employer-sponsored health insurance (aka group plan) typically has an average annual premium of $7,873, while an individual health plan costs around $7,911.

Although they’re almost in the same price range, you’ll split the costs of your company’s group plan with your employer, making it much more affordable compared to an individual health plan.

However, it’s important to note that companies, especially  “large firms” with 200 or more employees, can refuse to offer healthcare coverage for their employees because no federal law mandates them to do so. They’re only voluntarily offering employee benefits to avoid the penalties imposed by the Affordable Care Act (ACA). 

Under the ACA, big companies have shared responsibilities in making healthcare available, affordable, and high-quality in the US. That’s why they offer to pay at least 50% of their employees’ health insurance premiums. Otherwise, they’ll get penalized and should pay around $2,750 for every full-time employee or its part-time equivalent.

Medicaid

Another health plan you can rely on is Medicaid. It offers no-cost or low-cost comprehensive health coverage, specifically to people below certain income levels. Its patient copay costs can be as low as just $2. Some procedures don’t even need any copay at all.

Medicaid shouldn’t be confused with Medicare. Medicaid is mainly for giving medical costs and resources assistance to limited-income individuals, while Medicare is for people with disabilities and who are 65 or older. Medicaid also covers home care, personal care services, and nursing, which aren’t usually provided by Medicare. 

Short-term Health Insurance

Taking out short-term health insurance is a low-cost solution to fill a lapse in permanent coverage. It’s available for as low as $55 per month. Another advantage is that anyone can have it, but it’s typically used by people who:

• Changed jobs;
• Lost employer-sponsored coverage;
• Are attending out-of-state college; or 
• Are waiting for the Open Enrollment Period. 

Short-term health insurance is affordable because it only offers limited benefits, including preventive care, doctor visits, and emergency care. It usually doesn’t cover mental health, prescription drugs, and maternity care. 

In other words, compared to major medical coverage, it’ll likely cause out-of-pocket costs. However, remember it’s only intended for temporary coverage, not for the long term. It’s better than having no insurance at all. 

How to Choose the Cheapest Health Insurance Plan?

Prioritize choosing the right health plan type first. It’ll have a bigger impact on your overall costs compared to the insurance company you’ll pick. It’s also important to note that the cheapest health insurance for you depends on your medical needs and household income. 

Be aware of the most common insurance terms as well, such as universal vs term life or premium vs out-of-pocket cost. They’ll help you make better-informed decisions. For instance, for healthy, low-risk young adults, a high-deductible plan can be a good option since they are less likely to need medical care. However, if you have specific medical needs, opting for an out-of-pocket maximum with a low deductible is more cost-saving. 

Final Thoughts

Nobody knows when a health emergency will take place. Whether you’re young or old, you can face health risks at any stage in your life. That’s why investing in a good health insurance policy at the right time is crucial—the right time to do so is right now.