Getting Health
Insurance Coverage After College
In addition to finding a job and housing college graduates
who were covered by their university’s student health insurance may also need
to replace that coverage. Financial planners point out that obtaining health
insurance is basic to being able to budget and manage money responsibly. “Most
young people think of health insurance as something that allows you to pay for
treatment for an illness or accident,” says Dr. Dena Wise, Professor and
Consumer Economics Specialist with UT Extension. “What they may not realize is
that health insurance is a necessary financial management tool as well. Health
insurance makes health care costs predictable and controllable so you can
actually plan for them in your budget rather than having each medical event or
issue become a financial emergency.” UT health insurance experts offer the
following advice to new graduates.
For graduates who live in Tennessee, there are three basic
options for health insurance after college: (1) continuing to be covered on a
parent’s traditional plan, (2) purchasing a traditional plan through a private
insurer, or (3) purchasing a catastrophic health plan.
Provisions of the Affordable Care Act made it possible for young
people, regardless of whether they are students or living independently, to
remain on their parent’s insurance policy until their 26th birthday.
Remaining on a parent’s plan is often a more economical way to maintain
coverage and it’s especially helpful if the new graduate has not yet landed a
job with health insurance benefits. Even if the graduate’s new job offers
health insurance, they can still opt for continuing coverage under the parent’s
policy. New employees should be aware, however, that if they initially decline
employee coverage, they may pay a sizable penalty if they decide to enroll in
employee coverage at a later time.
If graduates have a
job that offers employee health insurance coverage, it generally offers the
next-best alternative to remaining on a parent’s policy. Particularly if the
graduate only needs individual—rather than family—coverage, premiums may be affordable.
If an employer’s health insurance plan is not available, a
graduate may be able to find private insurance through the through the Health
Insurance Marketplace. Graduates whose student health plan is ending may
qualify for a Special Enrollment Period to sign up for private insurance or
evaluate other options.
If they’re under 30, graduates can purchase a catastrophic
health plan through the Marketplace. The catastrophic plan’s high deductible
makes it a good plan only for those whose health is good enough to expect they
would just need basic preventive care, which is covered without the deductible
applying. The low premiums make it affordable, and even though the high
deductible may be a burden in the case of a serious medical issue or emergency,
it protects a young person’s future earnings from very large medical costs or
debt.
Create a College Savings Plan