How Much Does Health Insurance Cost a Young Adult

When you are shopping for health insurance for the first time, you will invariably ask, “how much does health insurance cost?”  This is a perfectly reasonable question.  When you buy a car, television, or any other major purchase you want to know how much it is going to cost.  And just like those things, there are a lot of variables that go into the cost of a health insurance plan.

Health Insurance Trend

One of the biggest factors that affect the cost of health insurance is medical trend.  Trend is the percent increase in health care costs.  Here is a good explanation of what causes medical trend.  A good estimation of trend is extremely important in determining how much health insurance costs.  If the trend estimation is off, premiums will be too high or too low.

Plan Design

The benefit design of an insurance plan plays a large part in how much it costs.  Just like with car insurance, a plan with a high deductible will have a lower premium than a plan with a low deductible.  The more financial risk you take upon yourself, the less you will pay in fixed monthly cost.  The same goes with a medical insurance plan.  The higher the deductible, copay, and out of pocket limits, the lower your premiums.

Age of the Individual

The age of an individual plays a big part in the cost of a health insurance plan, but not as much as it used to play.  Younger people need less health care than older people, so younger people pay less for claims.  The Patient Protection and Affordable Care Act (PPACA), or as many people know it, Obamacare, puts a cap on how much more an older person can be charged for an insurance plan than a younger person.

Government Programs and Subsidies

Government programs and legislation provides methods to reduce the cost of health insurance for young adults.  The two big ones are Medicaid and the health insurance exchanges.

Medicaid

Medicaid is a program administered by the states that provides some low income earners with assistance in paying for health care.  Eligibility varies by state, so check with your state’s Medicaid office for details.

If someone makes just enough to not be eligible for Medicaid, but still needs to find a way to cover their children, the Children’s Health Insurance Program (CHIP) can at least help pay for the cost of a young person’s children.

Health Insurance Exchanges

PPACA tried to simplify the answer to “how much does health insurance cost” by setting up health insurance exchanges.  Exchanges are online marketplaces where people can shop for health insurance plans side by side on an apples to apples basis.  Plan designs and premiums are plainly displayed.

However, for certain people, the premiums will not actually be what health insurance costs because of subsidies that are available to people that earn less than 4 times the poverty level.  If you fall into that category, you can receive assistance in paying for your health insurance premiums.

How much does health insurance cost is a question that people are always asking.  It is possible to find low cost health insurance.  With the exchanges and easy to use online tools, it can be easy to find out how much you owe for a medical insurance plan.

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How Can Young People Find Low Cost Health Insurance

When you are young and low on funds, finding low cost health insurance is a must.  When you go out searching for medical plans to enroll in, the monthly premiums can be overwhelming.  Fortunately, there are ways to keep the cost of your medical insurance needs as low as possible.  One thing, to keep in mind, though, is that the Patient Protection and Affordable Care Act (PPACA), or more commonly referred to as Obamacare, prevents the premiums for young people being as low as they otherwise could be.

Be Willing to Accept Larger Out of Pocket Expenses

Insurance is all about how much risk you are willing to take.  You pay a premium in exchange for the insurance company paying your medical claims.  If you want them to pay more claims when you are in need of medical care, then you will pay a higher premium.  Therefore, one way to get low cost health insurance is to enroll in plans with high deductibles, copays, and out of pocket maximums.  This leaves less financial exposure to the insurance company, and thereby reduces your monthly premium.

Join Your Employer’s Health Plan, if Available

If your employer offers a health insurance plan, it will almost always be less expensive that what you could find in the individual insurance market, especially for the employee portion (the dependent portion could get expensive).  Most employers subsidize the premium as a benefit to their employees.  And due to PPACA requirement, the plan will most likely be comprehensive enough to cover your health care needs.

Look at Your State’s Health Insurance Marketplace

PPACA has created health insurance exchanges, or marketplaces, where individuals can shop online and plainly see different medical plan options and their prices.  The idea of the marketplaces is to lower health insurance costs by creating a competition amongst insurance companies.  If this quest is successful, it can be a great place to find low cost health insurance.

If your state does not offer a marketplace, you can shop on the federal exchange.

Search for Yourself for Health Insurance on the Individual Market

If the exchanges don’t work for you, and your employer doesn’t offer a medical plan, you are still free to shop for insurance on your own.  The marketplaces are not the only places to find insurance.  Insurance companies like Blue Cross Blue Shield, Aetna, Cigna, UnitedHealthcare, etc. will still sell individual plans.  To make things easier, contact an insurance broker.

One Bad Thing About PPACA and Being Young

One of the ingredients that goes into an individual medical insurance premium is the age of the applicant.  Younger people have less claims, and thus their premiums are lower.  However, PPACA has limited how much higher the premiums can be for older people than younger people.  Therefore, the premiums for older people and younger people have been brought closer together.  This means that a premium for a younger person will be higher than before.  In essence, the law is asking younger people to help pay the cost of medical claims that older people incur.

Low Cost Health Insurance is Available through Subsidies

PPACA helps low income earners with premium subsidies through tax credits.  There are online tools to help you determine if you are available for this assistance.  The online marketplaces will also be able to determine if you are eligible.

Medical insurance plans will never be a cheap expense, especially with additional coverage being required by the legislature, but for young people, low cost health insurance is definitely available; it just might take some time and research.

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Aggregate vs. Embedded Deductible – What is the Difference?

When you are deciding on a health insurance plan to buy, it is vitally important to have an understanding of the plan options available to you and your family.  One of those options is your deductible.  The deductible is the amount of money you will pay out of pocket before the insurance company begins to make any payments.  In general, a medical insurance deductible works the same way as the deductible for your car or home.  When there is a claim, you pay first, and the insurance company pays second.  If you have a larger deductible, you have a smaller premium.

The deductible is the amount of money you will pay out of pocket before the insurance company begins to make any payments.

Individual vs. Family Deductible

With health insurance, though, there is a wrinkle.  It is called the family deductible.  Most insurance plans will have a deductible for each individual and a second deductible for the family.  Once a family reaches that family deductible the plan will begin to pay all or some of a claim.  How that family deductible is calculated and applied is what causes the difference between an embedded deductible and an aggregate deductible.  Knowing which kind of deductible your plan has can save a lot of headaches and help you plan for medical services.


What is an Embedded Deductible?

An embedded deductible is when the plan begins to make payments as soon as one member of the family has reached the individual deductible limit.  For example, if the individual deductible is $1,000 and the family deductible is $3,000 and one member of your family has an orthopedic procedure that costs $5,000, your family will be responsible for $1,000 and the insurance company will be responsible for $4,000 (assuming no coinsurance, which will be the assumption throughout this article).  There will also be $2,000 left over in the family deductible, so if someone else in your family needs health care services, you will be paying a deductible for those needs.

What is an Aggregate Deductible?

With an aggregate family deductible, your family will be paying the deductible until the entire family deductible is collected.  This kind of deductible can be because of medical care to one person or the entire family.

For example, lets say your family of 5 has an aggregate deductible of $3,000 and one member of your family has that same $5,000 procedure.  Your family will be responsible for $3,000, and the insurance company will pick up $2,000.  Your deductible will be satisfied.

Now, lets say that you have a procedure that costs $1,200.  You will be responsible for the entire $1,200, and $1,800 worth of deductible will be left to be paid.  Next, your spouse has a procedure that costs $1,500.  Again, you will be responsible for the entire $1,500, and $300 worth of deductible will be left to be paid.  Later, your child has a procedure that cost $6,000.  You will only be responsible for $300 of the deductible, and the insurance company will pay for the rest.  If anyone else in your family has medical services in the year that are subject to the deductible, you will not pay anything since your family deductible has been met.

How To Know Which Deductible You Have

If you are not sure if you have an aggregate or embedded deductible, call your insurance plan’s customer service line, ask your benefits representative at work if you are on an employer plan, or check out your Summary of Benefits and Coverage.

You can also lower your out-of-pocket costs by enrolling in a telemedicine program, where you can talk to a doctor anywhere, anytime, 24/7. These calls are usually at a much lower cost than a visit to your doctor, especially if you are on an HSA-eligible plan.

Once you know if you have an embedded deductible or an aggregate deductible you can more easily plan your purchase of a health insurance plan and the payments of health care services.



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