Heading off to college often means taking on financial responsibilities for the first time. Many college students open bank accounts and lines of credit in their own names, or they may rent apartments with friends. Health insurance is also an important financial component during this time. Many college students choose to stay on their parents’ insurance plans as long as possible, but this may not always be an option. Outside of remaining under Young Adult Coverage, there are several health insurance avenues college students may want to consider.
Enter the Health Insurance Marketplace Independently
Anyone 16 or older can independently enter the health insurance market. As a college student, you may be able to use a marketplace place either in your home state or the state where your college is located. If you have that option, then compare prices for policies on each state’s exchange.
For example, a 21-year-old from San Diego would pay, $306 for mid-tiered coverage at home, but similar coverage in Spokane, Washington is around $40 cheaper per month.
You may find it beneficial to enter the marketplace if you’re no longer dependent, if your parents’ health insurance plan doesn’t cover your needs or if your parents won’t allow you to be added to their insurance.
If you plan to use the marketplace, take time to understand the coverage and costs associated with each plan option. In addition, you may want to consider investing in a tax-deductible health savings account (HSA). In many states, marketplace insurance plans tend to have fairly high deductibles, meaning you’ll end up paying more out of pocket should you need to use the insurance.
Still, if you decide to enter the marketplace, you may qualify for extra savings on insurance coverage based on your income. In many states, if you earn less than $17,000 per year and you can’t be claimed as a dependent on anyone else’s return, then you may qualify for free or low-cost Medicare coverage. Plans vary by state, however, so use Healthcare.gov to check your eligibility and plan options.
When to Stay on Your Parents’ Insurance
The Affordable Care Act extended the amount of time an individual could stay on their parents’ health care plan from age 24 to age 26. Known as Young Adult Coverage, it allows you to stay on your parents’ health insurance plan throughout college and beyond.
Additionally, you may stay on the plan even if you get married, move out of your parents’ house or find a job. You can even remain on or rejoin a parents’ health care plan if you are eligible for employer-sponsored health care coverage.
If your parents’ health insurance coverage meets all of your needs, it may be a good idea to stay on that plan until you age out.
Health savings accounts (HSAs) can reduce the costs of healthcare when coupled with high deductible health plans (HDHPs). However, if your parents use an HSA, the funds can’t be used for your health care once your parents can’t claim you as a dependent on their taxes. If your parents mostly use an HSA alongside their insurance policy, then you might need to explore alternative options. Discuss your health insurance options with your parents and decide whether staying on their policy is in your best interest or if you should consider your own health insurance plan coupled with an HSA.
Explore Your College or University-Sponsored Health Insurance Plans
Many colleges and universities now offer health insurance coverage for full-time undergraduate and graduate students. Coverage and costs will vary by university, so ask your school about your student health coverage options. As with most insurance plans, there will likely be an open enrollment period in which you can sign up for coverage.
Aetna is just one insurance provider for college students. The company operates through a large number of U.S. colleges and universities and provides a useful tool called CoverU to help new and continuing college students navigate health care. While there’s a good chance your college or university is partnered with Aetna, your institution may also offer health insurance coverage through other providers.
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.