An overview of federal law
In the U.S., health insurance is undergoing major changes spurred by the Affordable Care Act. The federal law has introduced many new regulations designed to govern health care throughout the country and the law’s provisions will have a dramatic impact on the way health insurance works and how accessible it is, especially for young adults. While young people may be quite knowledgeable of certain things, especially if it has to do with pop culture, many people are confused about what the Affordable Care Act means and how it will affect them specifically.
Health insurance will be mandatory… for some
The first thing that every young adult should know about the Affordable Care Act is that it makes health insurance mandatory for all U.S. citizens. This means that all citizens will have to have an active health insurance policy beginning on January 1, 2014, just like all drivers are required to have auto insurance coverage for their vehicles. Those that do not purchase health insurance could face a tax penalty resulting in a fine of as much as $99. The fine will increase significantly over the coming years, meaning that the financial pressure on young adults will increase, eventually reaching a point where insurance coverage becomes an affordable option. While the law is quite explicit in making insurance coverage mandatory, there are some that could be exempt from this mandate.
Federal law allows young adults to remain on their parents’ health insurance plans until the age of 26, even if they are married, financial independent, or no longer live in the same household as their parents. Those offered health insurance coverage from their employers can opt to receive this coverage or remain on their parents’ plans.
Students have health insurance options through universities
For those attending university, federal law requires most major academic institutions to offer health insurance coverage to students. This coverage is required to meet minimum standards as outlined by the federal government, offering benefits concerning mental health, preventative care, and similar benefits. While the law does require all U.S. citizens to have health insurance beginning in 2014, this mandate actually only applies to those that make over $10,000 a year. Full-time and part-time students are not likely to make this level of income and are, therefore, exempt from mandatory insurance coverage.
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For young adults that do want health insurance coverage but cannot pay for it on their own and cannot take advantage of their parents’ insurance plan, federal subsidies are available. These subsidies are specifically designed to offset the cost of health insurance coverage. To be eligible for these subsidies, you must fall below 200% to 400% of the federal poverty level and you must apply for health insurance coverage through a state-based exchange program during their open enrollment period (October 1, 2013, to March 31, 2014). Failure to apply for coverage through an exchange will mean you lose access to federal subsidies for a time.
People up to age 30 have another health insurance option that comes in the form of catastrophic plans. These plans offer minimal benefits and come with a $6,400 deductible. Once the deductible is met, the plan offers coverage for the 10 essential health benefits as defined by the Affordable Care Act. Catastrophic plans are meant to be a last resort safety net for those that fail to attain health insurance coverage through other means.
A basic understanding of the Affordable Care Act can help dispel some of the confusion that surrounds the federal law and its affect on health insurance. Many of the law’s provisions concern tax reforms and regulations on the insurance industry itself and have little to no implication on the lives of people in general. More information concerning the health care law and how it may affect you can be found at the Healthcare.gov website.