Health Insurance 101 for Millennials

History

I’m sure you’re all jumping at the opportunity to study up on the history of health insurance in the United States! Not exactly, right? However, aren’t you a little curious as to why there was a need for overhauling the health insurance market? I mean what’s the big deal with the Affordable Care Act anyway? Maybe if I list what the ACA improved, you can get an idea of what we had previously:

Insurance companies can no longer drop your coverage if you become ill or make a mistake on your application
Insurance companies cannot deny you coverage because you have a pre-existing condition
Insurance companies can no longer set annual or lifetime limits on your health coverage
Insurance companies can no longer determine how much your premium costs based on your health status or gender
Insurance companies must spend 80 cents of every dollar received from premiums on quality of care, while only 20 cents may be applied to administrative costs
Patients have the right to appeal insurance company decisions
Young adults can stay on parents’ health insurance plans until age 26
Since the opening of the insurance Marketplace, over 10 million people have gained access to affordable insurance according to the Department of Health and Human Services

Now, in no way shape or form am I saying the ACA is the end-all, be-all. I am a Certified Application Counselor who helps consumers free of charge with enrolling in the ACA and Medicaid and by no means is it perfect. There are still many things that could be improved. For many though, it’s a much better option than what they had before. For those of you who are nerds like me and want to know about the history of the ACA and what it offers, follow this link: http://www.hhs.gov/healthcare/about-the-law/index.html#.

We all know health insurance can be overwhelming to understand, but especially so for millennials. To the majority of them it’s a new and unfamiliar subject with lots of foreign terms and rules. The image below shows the improvement in health insurance coverage from prior to the Affordable Care Act to after the implementation of the ACA. Even with the improvements in health coverage, young adults still have the highest uninsured rate. If you’re interested in more statistical information on insurance coverage rates, you can find really great, data-driven information from www.kff.org.

Insurance Key Terms

Just because you have insurance, doesn’t mean you know how it works or when to use it. Here is a quick 2 minute video on some basic terms of health insurance.

In case you didn’t catch all that, below are a few key terms and examples. If you’ve run across a term you didn’t know and it’s not covered below, check out: https://www.healthcare.gov/glossary/.

Premium- The amount you pay the insurance company every month to maintain health coverage. Example: I pay $120 per month to Anthem for my health insurance coverage. This is paid whether I use the insurance or not.

Deductible- The amount you pay before the health insurance company will pay for health care. Example: My deductible for the Anthem plan is $500. I must pay $500 out of my pocket before the insurance will begin to pay for services. This is in addition to the monthly premium.

Copayment- A type of out of pocket cost that is a fixed amount used to pay for health services after the deductible has been met. Example: I paid a $25 copayment to see my primary care physician when I had a cold. I had already paid met my $500 deductible earlier in the year. If the bill is more than $25, I will not pay anything additional.

Coinsurance- A type of out of pocket cost that is a fixed percentage used to pay for health services after the deductible has been met. It is very similar to a copayment, except it is a percentage rather than a fixed amount. Normally, plans either have a copayment or coinsurance. Example: The Anthem plan I have has a 30% coinsurance after I meet my deductible. I went to the doctor for my cold and the total bill was $100. I paid $30.

Insurance Enrollment

Now that you have an overview of the current health insurance system and a couple key insurance terms, we can talk about where to obtain health insurance. There are several different options for finding the right health insurance plan shown in the image. For most millennials they will begin looking for coverage after they age off their parent’s insurance at 26. Hopefully, they can find coverage through an employer. If the employer does not offer health insurance, they could shop for coverage through the Marketplace (the health exchange run by the government or state that offers tax credits to reduce cost) or with an independent agent. If they are unemployed they could purchase insurance through an agent (with mom/dad paying the premium!), pay full price for insurance through the Marketplace or obtain Medicaid in a limited amount of states.

A consumer cannot sign up for insurance whenever they want. Open Enrollment for health insurance this year through the Marketplace is November 1st, 2016 — January 31st, 2017. There are special circumstances that allow you to enroll in insurance outside of this open enrollment. Some of these circumstances include: loosing health coverage non-voluntarily, having a baby, getting married, moving out of service level, being released for incarceration and several more.

If you’re not sure where to start to find out what your health insurance options are, I encourage you to start with a Navigator or Certified Application Counselor in your community. They provide free, unbiased information. You can use this tool to find one in your area: https://localhelp.healthcare.gov