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Best Cheap Health Insurance for Young Adults

Best Cheap Health Insurance for Young Adults

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If you are a young adult, you may, for the first time, need to find your own health insurance policy. However, there are great options for those in their teens and 20s that provide comprehensive coverage at an affordable price. When shopping for health insurance as a young adult, you should consider your own specific situation with regard to your age, income and stage of life.

For example, a millennial who may be starting a family might require a different type of health insurance policy than a single person starting their first job and living alone. Therefore, it is critical to evaluate your own life and then carefully review policies so you can find the best option available.

Free health insurance options for young adults

We recommend first considering health insurance policies that you may be eligible for that have no cost. This includes either a company plan provided by your employer or being eligible for the federally funded Medicaid program.

Employer-sponsored health care

One of the best free or low-cost health insurance options for young adults would be acquiring coverage through an employer's health plan that is fully paid for. This is not as common as it used to be since health care costs are rising and employers are requiring their employees to pay a portion of the premium. However, employer-sponsored plans can still be a cheap option, as most employers will pay the larger portion of the premiums for your health care.

Typically, if you select employer coverage, your portion of the premium would be taken out of your paycheck pretax. Employer-sponsored health care will provide coverage for you and any dependents that you have, which is similar to many other types of health care that you should consider.

Medicaid

Another free or low-cost option for health insurance, if you qualify, is enrolling in the federally funded Medicaid program. Eligibility for this program will depend on if your state has passed legislation to expand its Medicaid program. States that have expanded Medicaid allow any resident to enroll in Medicaid if their household income falls below 138% of the federal poverty level. As a young adult, enrolling in the Medicaid program would make sense if you are currently unemployed or work at a company that does not offer health insurance benefits.

Best health insurance plans for young adults

If you do not receive employer coverage or have an income that is too high for Medicaid, then you can still find comprehensive health insurance plans from other areas including:

Health insurance marketplace plans

Cheap health insurance can be purchased through the Affordable Care Act (ACA) health insurance exchange in your state if you are not eligible for Medicaid coverage. On the state exchanges, there are typically five different plan tiers that are offered: Catastrophic, Bronze, Silver, Gold and Platinum. The best plan tier will depend on your income and how healthy you are.

If you are a single young adult and are looking for an individual plan, then the best health insurance could be a lower-tier plan like Catastrophic or Bronze. These policies can work well for most young adults or young couples who have not started a family and only need basic health insurance coverage. Both of these health policies have cheap premiums but also a high deductible, which makes them ideal if you expect low to zero medical costs. Additionally, Catastrophic health plans are only available if you are under 30 years old.

Silver health insurance policies have modest premiums and deductibles, and they would be better suited for young couples who may have just started a family. The lower deductibles would allow you to get access to coinsurance and copays more quickly, as you may be facing additional medical expenses due to a newborn or having a dependent. If you can afford higher premiums, a Gold or Platinum policy could be a good choice, as these policies have the lowest deductibles.

A key component of marketplace plans is that — with the exception of Catastrophic plans — they can provide premium tax credits depending on your level of household income.

Tax credits are used to reduce the amount that you would pay in premiums for your health insurance policy. In some cases, if you qualify for this subsidy, a marketplace plan can be much more affordable than employer-sponsored health care. Cost-efficient young adults with lower incomes can find this aspect of marketplace health insurance very valuable, as this tends to decrease premiums to affordable levels.

Below, we have provided average individual health insurance quotes for a young adult in California. As you can see, Catastrophic and Bronze plans are often the cheapest and what we recommend for young adults in great health without many medical expenses. As mentioned before, if you are beginning to start a family, a Silver-tier policy could be a better option due to the lower deductible.

Average Cost by Metal Tier

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Off-exchange health insurance

If you do not qualify for premium tax credits, then we would recommend comparing private health insurance policies to find the most affordable options. In the private marketplace, you have the option to purchase full benefit policies similar to ACA marketplace plans. These policies differ in that you would be purchasing health insurance directly from the insurer or through an agent. Furthermore, off-exchange plans are not eligible for premium tax credits that are provided by the government.

Student health insurance coverage

An affordable option for health insurance for full-time students or recent college graduates would be to purchase coverage through your university. Typically, your college or school would offer you a health insurance plan when you first arrive on campus. You may want to consider this option if you are currently on a parent's plan and the state where you attend school may not have a similar provider network available.

For example, say you and your parents lived in Michigan but you are planning on getting your education in Florida. If your parents' health insurance does not provide coverage in Florida, you would be without health insurance while getting your education. In this case, you could buy a cheap plan from your school for coverage.

Staying on a family health insurance plan

Young adults under the age of 26 have the option to stay on a parent’s health insurance policy. This can be a good health insurance option if your parents already receive health insurance through an employer or pay for an individual policy, as you would not need to pay for premiums. If your parents need you to help with payments for the family health insurance plan, then the added cost of adding you will be similar to the amount you would pay in premiums for your own individual policy.

You can join or remain on a parent’s plan even if you are:

  • Married
  • Not living with your parents
  • Attending school
  • Not financially dependent
  • Eligible to enroll in employer-sponsored coverage

All states allow parents to keep any dependents on their health insurance plan until that dependent turns 26. New York allows young adults to stay on their parent's policy until age 29, but the parent would need to pay a large premium. This would be a free health insurance option if your parent allows you to be added to their plan.

Short-term health insurance for young adults

Another off-exchange option you may want to consider is short-term health insurance, which can be bought directly from a health insurance provider. These are thin policies that do not provide the same level of benefits as robust ACA marketplace insurance or private insurance policies. However, short-term health insurance is a cheap and affordable alternative that can be useful for young adults with budget restrictions and fewer health care needs.

It should be noted that short-term plans should not be considered if you need health insurance that covers all of the essential benefits. Furthermore, if you have preexisting health conditions like diabetes, you could be denied coverage during the application process.

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.