Entering the adult world comes with several emotions. Some fear, mixed with a feeling of accomplishment, is pretty normal. You know you’re really “adulting” when you have to choose your first health insurance plan.
Choosing your first plan may seem overwhelming, so take time to study the basics to make the right choice for you. Here are a few key points to consider when you’re choosing your first health insurance plan.
You can stay on a parent's plan until your turn 26
Once you’re on your parents job-based insurance plan, you can stay on their plan until you turn 26, even if you:
- Start or leave school
- Live in or out of your parent’s home
- Are no longer claimed as a tax dependent
- Turn down job-based coverage
- Get married
- Have or adopt a child
If your parent’s have a job-based plan, your coverage typically ends when you turn 26. If you are on your parent’s Marketplace plan, you can be covered through December 31st of the year you turn 26 (or the age your state allows).
First job? Ask about your healthcare coverage options
Landing your first job is a monumental accomplishment. When you get that first position, be sure to ask about your healthcare coverage - and be sure to understand the options they provide.
Companies with over 50 full-time employees are required to offer health insurance coverage under the Affordable Care Act. Employers typically offer insurance plans that make financial sense for them. Employers usually pay a portion of the monthly premium, and the employee pays the rest. Some companies pay the entire monthly premium.
Some companies offer coverage as soon as you start. However, many require new employees to wait for a specific time period - often ninety days - before coverage kicks in. If you have to wait for coverage to begin, consider purchasing a short term policy to be covered while you wait.
In addition to health insurance, many employers offer additional health benefits such as vision and dental plans, wellness programs, Health Saving Accounts (HSA) or Flexible Spending Accounts (FSA). Be sure to learn about the entire health benefits package when you begin a new job to ensure you are using all the offered benefits.
Know your personal healthcare needs
It's essential to do a health assessment for yourself and anyone you will add to your plan to know what type of coverage you need. Here are a few questions to ask yourself:
- How often do we go to the doctor?
- Do I have chronic conditions that require additional healthcare resources or specialized care?
- Do I have medications? Do we anticipate needing more?
- Do I want to see specific healthcare providers?
Considering these needs allows you to have a future picture of your healthcare needs so you can choose the coverage that makes sense for you.
In addition, be sure to look at the monthly premium you’ll be responsible for paying, the deductible, co-pays, and the out-of-pocket-maximums for each plan to choose the one that meets your needs.
Main Types of Health Plans
There are several health plan types available. They all have pros and cons. Here’s a quick overview of the three most common types of health plans you'll see:
A Preferred Provider Organization (PPO)
A Preferred Provider Organization is a health plan that allows you to choose your healthcare providers. These plans have preferred providers in the network, but you can also see doctors outside of the network with PPOs.
Health Maintenance Organization (HMO)
A Health Maintenance Organization is a plan that has specific providers you can see to have your insurance cover the costs.
High Deductible Health Plan (HDHP)
High Deductible Health Plans have a high deductible that you must meet before insurance coverage begins. HDHPs usually have lower monthly premiums but higher out of pocket costs. Many HDHPs can be paired with a Health Savings Account (HSA), which allows you to use pre-tax money to help with healthcare costs.
Choosing your first insurance plan can be overwhelming. Once you take the time to consider your healthcare needs, you’ll be ready to study the options carefully and make the best decision for you. The best part is that you can make changes year to year if need be.
Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.