Questions Young Adults Will Ask?


GroupA couple of weeks ago I read that 90% of Americans are still confused about Obamacare.  I understand the confusion.  After all, when the ones who are responsible for the Exchanges are indecisive themselves, how can the average “Joe” make any informed decisions.

Never-the-less, Kathleen Sebelius, the Secretary of Health and Human Services, has promised both her boss, Barack Obama, and the House Ways and Means Committee that the new Health Insurance Exchanges and Essential Benefit Plans will be ready  to go by October 1.

Americans have also been promised that we would have at least 45 days in which we can learn and consider our options.  (I guess we should consider ourselves lucky.  Harry Reid gave the U.S. Senate less than 48 hours to read and consider the 2400 page Patient’s Protection and Affordable Care Act that created this mess.)

Recently, I was asked a question that caused me to think about the choices that young adults will have to make.

I realize that my target market is Baby Boomers.  That does not mean that I am forbidden to keep my eye open to the problems that will be faced by Millennials.

My wife and I have raised two sons.  Both of them belong to the Millennial Generation.  They, and their friends, will have questions about what is required of them.  I hope to be able to give them wise counsel.

The first question I expect from them is…

WHAT HAPPENS WHEN I GRADUATE?

The PPACA considered that problem in 2010.  It reads…

‘‘SEC. 2714 o42 U.S.C. 300gg–14.. EXTENSION OF DEPENDENT COVERAGE.

‘‘(a) IN GENERAL.—A group health plan and a health insurance issuer offering group or individual health insurance coverage that provides dependent coverage of children shall continue to make such coverage available for an adult child until the child turns 26 years of age. Nothing in this section shall require a health plan or a health insurance issuer described in the preceding sentence to make coverage available for a child of a child receiving dependent coverage.  {As revised by section 2301(b) of HCERA}.

‘‘(b) REGULATIONS.—The Secretary shall promulgate regulations to define the dependents to which coverage shall be made available under subsection (a).

‘‘(c) RULE OF CONSTRUCTION.—Nothing in this section shall be construed to modify the definition of ‘dependent’ as used in the Internal Revenue Code of 1986 with respect to the tax treatment of the cost of coverage.”

What this means to them is fairly straight forward.  Under the terms of the Patient’s Protection and Affordable Care Act, children who are  younger than 26 are able to obtain health insurance through their parent’s group plan.

Many states already had a similar law but required people to be a full-time student.  This new law removes the student requirement.

Unfortunately, this benefit may prevent many young adults from qualifying for government subsidy payments for their health insurance.

One of the requirements for eligibility for enrollment in one of the new Health Benefit Exchanges is that people do not have access to group health insurance.

Unless an exception is made for young adults under 26 whose parents have group health insurance, they cannot participate in an exchange.  Since the new exchanges are the only way in which a person can get a government subsidy, those young adults will be penalized.

At this time, I do not know what the solution to this predicament is.  I hope that the Department of Health and Human Services will recognize the potential problem and correct it before the Exchanges are introduced to the American public.

The same law restricts the ability of people to use the new health insurance exchanges.  People who are eligible for group health insurance are not able to enroll in an Essential Health Plan through the new exchanges.

If they are not, they will have 3 options.

  1. They can rejoin their parent’s group health insurance plan.
  2. They can persuade their employers to offer a group plan.
  3. They can use a licensed insurance agent to purchase an Essential Benefit Plan outside of the new exchanges.

HOW DO I DEAL WITH RATE SHOCK?

My sons, and their friends, are in their late 20s.  By now, they are used to budgeting for regular bills.  Many of them are already married and have family responsibilities.  They have gotten used to the idea that mommy and daddy are no longer there to pay their bills.

Unfortunately, there are still millions of young adults who have just graduated from high school or college.  While they are in the middle of the transition from childhood to being an adult, they will be hit with the largest rate increase for any group in America.

Since it is mandated by the government that they pay it, they have no choice.  It is a shame that the biggest rate increase is going to happen to the group that is paid the least.

If they qualify for a subsidy through the new exchanges or have understanding parents who will continue to pay for their health insurance through their group, they should be alright.

However, if they are not eligible for a government subsidy or their parents are no longer willing to pay for their health insurance, they have very few options.

DO I HAVE OPTIONS?

The options that are available for a young adult are few but there are some that still exist.

  1. DELAY – If you have a qualifying major medical policy before the end of 2013, a young adult may be able to post-pone the inevitable and hope that things change for the better.  One wrinkle in the enrollment process for the Essential Benefit Plans allows a person to wait until the anniversary of his/her policy in 2014 to enroll in one of the new mandated plans without penalty.  That means that if you have a plan with a December 1 anniversary, you may be able to delay enrollment in a government approved Essential Benefit Plan for 11 months.
  2. CATASTROPHIC – When the PPACA was written, the Gang of Six, who wrote the law anticipated that rates would increase drastically.  While the rest of Americans must choose from one of 4 “Metal” plans, young adults, under 30, have a 5th option.  The “Catastrophic” plan will have a higher deductible and more limitations than the regular plans.  It is also supposed to be much less expensive.  Healthy young adults are supposed to have that option to save some money.  Details about the plan will not be available until later this summer.
  3. OFF EXCHANGE – In a conference call I participated in earlier this week I was told that insurance brokers are supposed to be allowed to help people by selling the same policies that are available in the new exchanges.  If that is true, young adults who are not able to qualify for coverage through the new exchanges should be able to get the same plans, and subsidies (in some cases) by working with an insurance broker.

I am certain that as the Open Enrollment Period gets closer, Americans, not just Millennials are going to have several questions.  Click the banner below to subscribe to my agency’s email list.  As the Open Enrollment Period approaches, I will try to keep you, and my clients, informed on what is happening, what they must do and how they can do it.

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