When she graduated from college, Allyson Raymond, 24, of Oakland, California, decided not to join her parents’ health insurance plan because the monthly cost was simply beyond what she could afford on her salary. “I went without any health insurance for several months, attending free clinics and such, but with my biking commute, working around children, and a scary string of random acts of violence, I started becoming concerned that something would happen to me and I wouldn’t be able to afford the medical bills,” explains Raymond.
So she decided to buy a month-to-month plan through eHealthinsurance.com. “It seemed better to pay monthly than to just hope that nothing would happen,” says Raymond, who’s already seen her premium increase once. “I’m worried rates will continue to rise, especially since I don’t qualify for Medicaid [which will be expanded under the Affordable Care Act to include more people starting January 1, 2014.]
Lately, young adults like Raymond have had even more to worry about: There’s been a lot of talk about how health insurance premiums for people in their 20s, 30s, and early 40s may rise—what’s being called “sticker shock”—even higher when the Affordable Care Act (ACA) health insurance exchanges kick in in January.
The U.S. Department of Health and Human Services (HHS) recently finalized a rule that limits how much health insurance companies can charge many older people, but there are no such protections for younger people. In fact, insurance companies have claimed that a decision to limit rate increases on older people could push them to set premium rates for younger people very high. Responding to the HHS’ final rule, Karen Ignagni, head of America’s Health Insurance Plans, the largest health insurance trade association, issued a release saying that “the new restrictions on age rating will result in an overnight increase in healthcare costs for people in their 20s, 30s, and early 40s.”
Insurance companies claim that rate limits on older people mean they must charge younger people much more.
Ignagni added that the HHS decision “increases the likelihood that younger, healthier people [will] forgo purchasing insurance until they are sick or injured. When this happens, costs go up for everyone, young and old.” Ignagni said people in their 20s and 30s could see insurance premiums jump 29 percent and 19 percent, respectively.
But advocates for consumers say that’s not the case—and that health insurers are using scare tactics to frighten people who will be buying health insurance and to challenge the new ruling. “I don’t agree that young adults will see premium rate jumps,” says Kathleen Stoll, head of policy for healthcare consumer advocacy group Families USA, which supports the Affordable Care Act. “I think young adults will see a lot of new options to choose from that they will find meet their healthcare needs and will be affordable.” Stoll says that it’s simply too soon to predict what premiums will be in the new state insurance marketplaces. Also important are several other factors that will play a role in how affordable health insurance will be for many young adults, including:
Under the Affordable Care Act, you can now be insured as a dependent on your parent’s health insurance if you’re under 26 and you don’t have your own job-based coverage. Starting in 2014, if you have income up to about $15,000 per year for a single person (higher income for couples/families with children), you may be eligible for comprehensive, affordable health coverage through Medicaid. Starting in 2014, if your income is less than about $46,000 for a single person and your job doesn’t offer affordable coverage, you’ll be eligible for significant tax credits to help pay for private insurance. And you get the same tax credit amount whether you choose a low-premium or high-premium plan from the new state insurance marketplaces. (The new insurance marketplaces will also be required to review premiums to make sure they’re not inappropriately high to inflate insurance company profits.) Plans that young adults buy will now cover certain services, including free preventive services (without co-pays) and the new plans cannot arbitrarily put limits on how much is paid for in a year or over a lifetime. Which means that a young adult will have better coverage without unexpected holes or coverage that suddenly ends if they get sick or hurt.
'Young adults will see a lot of new options to choose from to meet their healthcare needs and will be affordable,' says one healthcare expert.
Keep in mind that if you choose to go without insurance, you’ll have to pay a tax penalty—close to $300 in 2014 and close to $1,000 in 2015—so opting out may not save you money in the long run.
Other options will still be available, says Stoll, including buying just a catastrophic plan that is likely to carry the lowest price tag. Even these plans will still get you free coverage for some preventive services, such as Pap smears, but you should expect to pay more out-of pocket for other services.
Premiums won’t be announced for several months, so until then Stoll advises checking out the facts on the ACA so you know what options are open to you at work and through your parents if you’re under 26. Find the specifics here and when information call centers open in your state July 1, 2013. And raise your concerns. The Department of Health and Human Services has set up a Facebook paged aimed squarely at younger people. Don’t be shy.
For now, Allyson Raymond is hoping she can manage what comes. With her student loans, she has very limited extra money every month, and while her high deductible/low monthly premium is affordable right now, she’s not sure she could manage paying her deductible if she needed to. “[If I do,] I’ll end up having to significantly rearrange my budget, which may or may not involve cutting out health insurance for several months.”
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Fran Kritz is a freelance writer specializing in health and health policy who lives in Silver Spring, Maryland. Takepart.com