Young adults — and in many cases, parents who were subsidizing them — already got a major perk from the health care law starting in September 2010, when they were permitted to stay on parents’ policies up to their 26th birthday. That’s true whether or not you live at home, are still in school or are a dependent for tax purposes. In most cases, staying on your parents’ policy is still the best deal, especially if they already have to pay for family coverage for younger siblings.
But if you live in another city that isn’t covered by your parents’ network, or if your parents aren’t covering other children and have to pay a lot extra to keep you on their policy, compare the cost of buying coverage on your own. Unfortunately, healthy young adults looking for individual coverage are likely to face some of the steepest premium increases under the new law. You can find policies for about $100 to $200 per month (except in a few high-cost states, such as New York). Those prices are likely to increase, although the new policies may be more comprehensive. In California, for example, a 25-year-old will pay an average premium of $250 per month for a silver policy, which is designed to cover 70 percent of health care costs for an average person.
Avalere Health estimates that about two-thirds of young adults (age 30 or younger) who are currently uninsured or have nongroup health insurance will be eligible for a subsidy. The size of the subsidy is the difference between the amount you’re expected to contribute based on your income and the cost of the benchmark plan in your state. Subsidies come in the form of advance tax credits that reduce what you pay for a policy. When applying for the coverage on the exchange, you estimate your income for the year. The figures will be adjusted when you file your 2014 taxes. If you earn more than you reported, you may have to pay back some of the credit.
If you’re younger than 30, you can also buy a special high-deductible catastrophic policy. In California, a catastrophic policy can cost as little as $141 per month. These policies don’t qualify for the subsidies.
If you already have your own policy — or you buy one before the end of the year — you may be able to keep it at current rates until the yearlong policy term is over. Rules vary by state and insurer.Kimberly Lankford is a contributing editor to Kiplinger’s Personal Finance magazine and the author of Ask Kim for Money Smart Solutions (Kaplan, $18.95). Send your questions and comments to moneypower@ kiplinger.com. And for more on this and similar money topics, visit Kiplinger.com.