Buying Health Insurance: A Millennial’s Guide

One of the most important, yet complex products you will purchase as an adult is health insurance. But with a nearly endless list of options, individual state laws to abide by, and constant changes in what insurance companies offer, choosing the right health insurance plan has never been more challenging.

That’s why we’ve prepared this guide to purchasing health insurance for millennials.

Employer-Sponsored

In the world of health insurance, employer-sponsored policies reign supreme for most individuals. Many employers provide health insurance coverage at no cost to their employees or for only a fraction of the actual premium. Yet, there are also a couple drawbacks to consider before enrolling. Let’s look at the pros and cons of employer-sponsored health insurance.

Pros:

1. Cost: Employer-sponsored health insurance is usually the most affordable option, as employers often contribute to the cost of the premium.
2. Convenient: Having your health insurance coverage through your employer makes it easy to enroll and manage your coverage, with any premiums automatically deducted from your paycheck.
3. Comprehensive Coverage: Many employer-sponsored health insurance plans offer comprehensive coverage, including doctor visits, hospital stays, prescription drugs, and preventive care.

Cons:

1. Limited Provider Network: Some employer-sponsored health insurance plans have limited networks of doctors and hospitals. This means you may lose your primary doctor by switching to an employer-sponsored plan.
2. No Choice in Plan: With employer-sponsored health insurance, you often have limited options for choosing your insurance plan and may not be able to select the plan that best fits your needs.
3. Job Loss: If you lose your job, you may also lose your health insurance coverage, meaning that you will need to find alternative coverage until you are able to obtain a new job with healthcare benefits.

Regarding job loss, there is an option to purchase coverage under COBRA. This coverage extends your employers’ health insurance coverage for up to 18 months. However, you are responsible for the entire premium, which is typically much higher than other health insurance options.

Short Term Health Insurance

If there is one thing millennials are known for, it might be job hopping. According to Gallup, 1 in 5 millennials have changed jobs in the past year. This means losing employer-sponsored health insurance. A short-term health insurance policy can fill in the gap until you land your next job with healthcare coverage.

Pros:

1. Cost: Short-term health insurance plans are generally more affordable compared to traditional health insurance plans.
2. Flexibility: These plans offer more flexibility in coverage period and plan options. You can choose the length of coverage that fits your specific needs.
3. Speed: Traditional insurance requires medical underwriting and can take more than a week to obtain. Short-term health insurance plans can often be purchased on the same day, providing coverage immediately.

Cons:

1. Limited Coverage: Short-term health insurance plans generally offer limited coverage compared to traditional insurance plans. They may not cover pre-existing conditions or specific medical procedures.
2. Renewal: These plans often do not renew automatically, which means you will have to reapply for coverage once the plan expires.
3. No Obamacare Protections: Another downside to short-term health plans is that they are not required to cover essential health benefits, and they are not subject to the same consumer protections as Obamacare plans.

A short-term health insurance plan is a good choice if you are looking for a quick, cost-effective solution while in between jobs. However, they come with limitations and drawbacks that must be considered before purchasing a policy.

Catastrophic Health Insurance

If your new employer doesn’t offer health insurance, or you’ve decided to step out on your own, cost becomes a much bigger concern. One option is a catastrophic health insurance plan. These plans provide a safety net for the worst-case scenario, but expect to pay more initially for care in the form of deductibles, copays, and coinsurance.

Pros:

1. Cost: Besides short term medical plans, catastrophic health insurance policies tend to be much more affordable than traditional health insurance plans. This makes these policies a good option for those on a budget.
2. Coverage for Big Medical Expenses: The purpose of these policies is to provide coverage for major medical expenses. This includes hospital stays, emergency room visits, and most surgeries.
3. Coverage Gap: Catastrophic insurance policies serve as a financial backstop for those who are uninsured or underinsured, offering coverage for major medical expenses that might otherwise be unaffordable.

Cons:

1. Limited Coverage: Catastrophic health insurance policies provide limited to no coverage for routine medical expenses, doctor visits, prescription drugs, and preventive care.
2. High Deductibles: These policies often come with high deductibles. This means you will pay out of pocket before insurance kicks in.
3. No Obamacare Protections: Just like short-term health insurance, many catastrophic insurance policies may not be subject to the same consumer protections as Obamacare plans.

Catastrophic health insurance policies are a good option for those looking for affordable coverage for major medical expenses. However, it is critical to be aware of their limitations and drawbacks.

Medicaid

Medicaid is a government-sponsored program providing health insurance to low-income individuals and families. If your time in between jobs lasts for more than a year, and you have a limited income, you may be eligible to qualify for Medicaid coverage.

Pros:

1. Cost: As a government-sponsored program, health insurance coverage is offered for no cost in most cases.
2. Comprehensive Coverage: Medicaid covers a wide range of medical expenses, including doctor visits, hospital stays, prescription drugs, and preventive care.
3. Obamacare Protections: Medicaid is subject to the same consumer protections as Obamacare plans. This means it must cover essential health benefits and cannot discriminate against individuals with pre-existing conditions.

Cons:

1. Eligibility: To be eligible for Medicaid, you must meet specific income requirements, which can vary from state to state.
2. Limited Provider Network: Medicaid plans often have limited networks of doctors and hospitals. This may mean not having access to your current physicians.
3. Long Waitlists: In some states, there may be long waitlists for Medicaid coverage, requiring you to wait months before you become eligible.

Medicaid should be viewed as an option of last resort due to its limited coverage and lack of choice when it comes to access to doctors. However, for those with little to no income, Medicaid serves its purpose of providing coverage when other options may not be within reach.

Individual Health Insurance

Individual health insurance plans, whether purchased through a health insurance exchange or from the private market, offer the widest choice of options for your coverage needs. With so many choices, it is important to spend time reviewing each plan carefully before making a purchase.

Pros:

1. Choice: With a private health insurance policy, you can choose from a variety of insurance plans and select the one that best fits your needs and budget.
2. Comprehensive Coverage: Many private health insurance plans offer comprehensive coverage, including doctor visits, hospital stays, prescription drugs, and preventive care.
3. Additional Coverage: Supplemental coverage may also be available with a private health insurance plan. including dental and vision coverage.

Cons:

1. Cost: Private health insurance policies can be expensive. Depending on your income, plans purchased through a health insurance exchange may be eligible for tax credits to offset some or all your premium.
2. Limited Provider Network: Some private health insurance plans have limited networks of doctors and hospitals. This means you may not have access to your preferred choice of doctors.
3. Obamacare Protections: Only insurance policies offered through a health insurance exchange must include consumer protections required under Obamacare. Private health insurance policies purchased outside of an exchange do not have the same protections and may not cover essential health benefits or protect those with pre-existing conditions.

Conclusion

There you have it: the five types of health insurance available today for millennials. Choosing the right plan requires a balance between your personal health needs, physician access, and cost. An independent health insurance agent can help you navigate all your options and help you select the best plan that meets your needs and budget.

But don’t wait! The best health insurance plans almost always require medical underwriting. Since our health can change in an instant, begin your health insurance search today.