NEW YORK (MainStreet) — For Americans 30 and under choosing a health care plan – many for the first time – there is no shortage of moving parts to consider.
For keeping costs low for younger consumers who habitually make the lowest incomes, accepting a high-deductible plan in exchange for lower monthly premiums (or payments) might be the way to go. After all, the 30-and-under demographic is not only the youngest section of the workforce, it’s also the healthiest, and accepting some elevated risk of using high health care plan deductibles can make good sense.
To find the best option, Harley Gordon, co-founder of Agent Review, a Bellevue, Wash., online insurance agent reviewer, advises the younger generation to focus on the “three H’s”:
1. Measure your current health. Do you get sick a lot? “If, for example, you’re a teacher surrounded by germs or have a high-stress job that impacts your health, you might consider a lower-deductible plan so you’re not paying for every visit to the doctor or trip to the pharmacy,” Gordon says.
2. Evaluate your everyday habits. Do you visit the doctor often, whether you’re sick or not? “If not, a high-deductible plan could work for you, because you only pay when you actually seek out medical treatment,” he adds.
3. Weigh whether you're high-risk. Do you live an active lifestyle? Do you snowboard? Do CrossFit? “If chances are high you’ll break a bone or otherwise get injured, you might be paying more for hospital bills out of pocket with a high-deductible plan – consider a low-deductible option,” Gordon says.
For a lot of consumers under 30, a catastrophic plan may be sufficient, but they're also advised to save in an health savings account to pay any deductible, says Adam Beck, assistant professor of health insurance at The American College in Bryn Mawr, Pa. “The same is true for a bronze plan, which for many young people will make the most sense,” he adds. Beck says younger people should visit the national (and state) health insurance marketplace to explore all their options.
But there is a caveat with this approach. “This could yield positive results, but a lot of young, single people can get into a bit of a trap,” he says. “They may not make much money – say $35,000 a year in an entry-level job – but because they are single with no dependents, they still earn well above the poverty line and won't qualify for much of a subsidy, if any.”
If the young man or woman is under age 26, the ACA has a way to help: They can stay on their parents' plan, Beck notes.
It’s also vital for young Americans to understand they might experience a higher premium increase if they don’t update their subsidy annually. "Without updating their subsidy, an individual is subjected to picking up 100% of the premium increase personally, as opposed to a portion consistent with their previous subsidy," notes John O'Donnell, president of Insurance Consultants of Central Florida.
Additionally, healthy younger people should learn about the limited-network plans that are increasingly available for lower costs. ”Individuals under age 30 are also eligible for 'catastrophic' plans, which is its own tier of plans that are less expensive than most bronze-level plans [on the health exchanges] and can be a very affordable option,” O’Donnell adds.
If you do opt for a high-deductible plan, you may have more leverage – and more leniency, financially – than you might think.
“My advice to a young person is to take the highest deductible with the best network they can find,” Gordon says. “Most Obamacare plans have restricted networks, so they should make sure good hospitals and doctors are in the network. If there is a large bill and the deductible is reached, almost every hospital and doctor will negotiate a payment plan over a period of years.”
“Just because there is a bill for $6,000, it doesn’t mean it must be paid right away,” Gordon says.