Understanding Health Insurance for College Students & New Grads

Meet the Experts

Michael Merrigan Read bio
Joel Ohman Read bio

Written by

Kenya McCullum Read bio

While some college students are able to remain on their parent’s health insurance plan, some are responsible for getting their own health insurance for the first time. The current health insurance system in the U.S. can be a complicated system to navigate, so this guide is designed to help students understand the Affordable Care Act, how to choose the right plan, and common insurance terms that every patient should understand.

Navigating the Affordable Care Act

Health insurance can be confusing, especially for those who are getting coverage for the first time. This section explains what college students and recently grads can expect and the benefits that are still available to them through to the Affordable Care Act.

College students and recent graduates have a few choices for receiving health insurance. For those who are still in school, signing up for a student health plan through school is an affordable way to get the insurance they need. In addition, current students and recent graduates have the option to stay on their parents’ health care plans until they reach 26 years old. When people do this, they can either enroll in the insurance that their parents receive from their jobs or a plan parents purchase through the Health Insurance Marketplace. Marketplace plans are offered by the states and on the federal level if a state marketplace is not available.

Students and recent college graduates may be able to purchase their own coverage through the Health Insurance Marketplace. In order to find out what type of plans they are eligible for, people can visit HealthCare.gov and enter information about their income, the state they live in, and how many people live in their household. In addition, some people may qualify for a discount on their health insurance plans depending on their income, provided that they aren’t claimed as a dependent on their parents’ tax return.

Focus on ACA Changes

Since the change of administration in Washington, D.C., the Affordable Care Act has been modified. For example, one of the changes to the program is that the individual mandate has been eliminated, which means that people who do not carry insurance will no longer be required to pay a penalty when they file their taxes. In addition, changes to the law have resulted in increased premiums and shorter enrollment periods.

Although students and recent graduates can still receive their health insurance from the Affordable Care Act, it’s important for them to keep abreast of current developments at HealthCare.gov since the program is still evolving.

How to Choose & Purchase Student Medical Coverage

Choosing health insurance is an important decision that shouldn’t be taken lightly. In order to make an informed choice, it’s imperative for students and recent graduates to understand what their options are. The table below provides information on medical coverage avenues to help people make that choice.

Purchase through school Parent health plan Medicaid Marketplace
Plan
Workplace Plan Catastrophic Plan
What is it? Many colleges offer medical insurance plans to students, which may be funded directly by the school or through an insurance company. College students can stay on their parents’ health insurance plans until they’re 26 years old – even after they graduate. They are also still eligible if they get married, have a child, or move out of their parents’ home. Under the Affordable Care Act, Medicaid was expanded in order to provide coverage to low-income Americans. People can purchase through the Health Insurance Marketplace on HealthCare.gov. Workplace plans are an alternative for those who do not receive insurance from the Health Insurance Marketplace or their parents’ plan. These plans are designed to protect against major, unforeseen medical expenses; basic coverage is much more limited, including certain kinds of preventive care and three doctor’s appointments.
How does it work? The costs of school-based plans are charged with the institution’s other expenses, so students can apply loans to their health care coverage. Students who are currently on their parents’ plan can remain on it. Those who are not already covered by their parents’ insurance can be added during open or special enrollment periods. People who qualify can receive coverage for free, or at low cost. People can get coverage through the marketplace run by their state, or the federal one if no state coverage is available. People who work for companies that have at least 50 full-time equivalent employees are required to offer insurance. People under 30 can purchase a catastrophic health plan, which is designed for those who cannot afford other types of coverage and need a plan with a low monthly premium.
Who is eligible? Depending on the college, eligibility may be based on the number of credits the student is enrolled in. Anyone under the age of 26. Eligibility varies from state to state, but generally people must be 133 percent under the poverty level to receive Medicaid. People who are U.S. citizens or nationals are eligible. However, those who are incarcerated or receiving Medicare coverage cannot get insurance through the marketplace. Full-time employees or the equivalent. Those who work part time may be able to receive insurance from their employer based on the standards set by the organization. As a result, employees may be required to work a certain number of hours per week. People under 30 or those of any age who cannot afford job-based insurance or a marketplace plan.
How can you get it? Contact the school’s health center for information. Anyone who is not currently on a plan can be added to their parent’s plan during the enrollment period. People can apply directly through their local Medicaid office or through the Health Insurance Marketplace. Contact HealthCare.gov. Contact the company’s human resources department. Contact HealthCare.gov.

Busting 5 Health Insurance Myths

Since health insurance can be complicated, there are many myths associated with it. The following are some of those myths and the truth that students and recent graduates should know.

Myth: I’m young and healthy. I don’t need insurance.
Busted:

Students who are young and healthy today may believe they don’t need health insurance. However, there is no guarantee that anyone won’t develop an illness and need treatment, or get into an accident that requires care. As a result, it’s important for young people to get insurance in case they end up needing health care services that they may not otherwise be able to afford.

Myth: The Affordable Care Act has been completely repealed.
Busted:

This is false. However, there have been changes made to the legislation since the current administration took power. For example, people are no longer subject to tax penalties for not having insurance. Although college students and recent grads can currently get coverage through the Affordable Care Act, it’s important for them to keep up with what’s going on in case further changes are made.

Myth: If I have a pre-existing condition, I’m out of luck.
Busted:

Under the Affordable Care Act, people cannot be turned down for insurance because they have a pre-existing condition. In addition, insurance companies are prohibited from charging these patients more or denying an insurance claim because of their pre-existing condition.

Myth: The best insurance is always through work.
Busted:

Not necessarily. In some cases, people can get comparable coverage that is more affordable through the Health Insurance Marketplace.

Myth: Dental health coverage is not available through the Affordable Care Act.
Busted:

That’s not true. The Affordable Care Act allows people to get dental coverage through certain health plans in the marketplace. In addition, there are stand-alone dental plans available. If people decide to obtain a separate dental plan, they will be required to pay an additional premium.

FAQ: Coverage for Recent College Grads

Graduating from college is an exciting time, so people may not necessarily be considering what they will do about their health insurance coverage during this stage of their life. However, it is still important for recent grads to make sure they have coverage in case the unexpected happens. This section answers some questions that people may have about getting health insurance after graduation.

If I have the option of staying on my parents’ insurance or signing up through work, which should I do?

When deciding on whether or not to stay on their parents’ insurance, recent graduates should consider plans for the immediate future. If they are planning to stay in the same region as their parents, which means they would still have access to health care providers in their current network, it may make more sense for them to keep their insurance coverage as it is. However, those who are moving to another area are probably better off getting coverage from their job so they don’t have to travel in order to get health care from providers in the network where their parents’ live.

If I stay on my parents’ plan, will my health treatments be kept private?

No. Insurance companies send notices to policyholders about any care that has been administered, so college graduates on their parents’ plan will not be able to keep their treatments private.

If I get married and can’t get insurance any other way, can I still continue to get coverage through my parents’ plan?

Yes, even people who get married can stay on their parents’ health insurance plan until they are 26 years old.

What if I’m not employed?

People who are not employed and don’t have the option to get health insurance through their parents can receive coverage through Medicaid at no charge. However, recent grads who are claimed by their parents as dependents may not be eligible.

If you don’t have a job offering insurance or a parent’s policy to stay on, what are other options?

In this case, people can sign up for a health care plan through the Health Insurance Marketplace. They should consult HealthCare.gov to find out their options. Also, if they cannot afford to buy a plan, they may be eligible to receive Medicaid coverage.

Can I get Medicaid even if I have a job that does offer insurance?

Those who live in a state that expanded Medicaid through the Affordable Care Act can generally get coverage if they make $16,000 or less.

When can I sign up for insurance?

People who want to sign up for a new insurance plan must apply during the enrollment period. For the Health Insurance Marketplace, the enrollment period is from November 1 to December 15. However, those who are applying for Medicaid coverage do not have to wait until the enrollment period. Also, in some cases, people may be able to sign up for a plan during a special enrollment period that occurs after the general enrollment ends.

Can I get mental health care through the Affordable Care Act?

Yes. All plans include psychotherapy, inpatient behavioral health services, and substance abuse treatment.

What is a catastrophic health plan?

A catastrophic health plan allows people who can’t afford a regular plan to have coverage during a worse-case scenario. These plans have high deductibles and low monthly premiums, and people on them have to pay out of pocket for some routine services.

If I want to be self-employed, can I still receive health insurance?

Yes, those who work on a freelance basis can receive health insurance through their parents’ plan or buy insurance on the Health Insurance Marketplace.

Using Your Health Insurance

When signing up for health insurance for the first time, students and recent college graduates may not know how the process of using insurance works. In order to help those who are new to insurance, this section includes common terms people should know, as well as the steps for using insurance.

Health Insurance Glossary for College Students

  • Co-pay:

    This is the flat fee that patients are required to pay for the services they receive. The amount depends on the type of service provided. In some cases, a health care plan may not require co-payments.

  • Deductible:

    A deductible is the amount that people are required to pay before an insurance provider pays for benefits. The amount of deductibles vary depending on the plan and last for the duration of the benefit period, which is generally a year.

  • Explanation of benefits:

    Commonly referred to as the “EOB,” this is a form that the insured person receives from their insurance company that outlines how claims are processed and appealed. The EOB may come via email or through regular mail, but most insurance companies have EOBs available online.

  • In-network:

    Healthcare providers that are in-network are professionals who have agreed to offer services to a plan’s customers at a negotiated rate.

  • Out-of-pocket maximum:

    This is the maximum amount that customers are required to pay in deductibles. After this amount has been reached, the insurance provider pays for 100 percent of covered services.

  • Out-of-network:

    When patients receive treatment from out-of-network providers, it means the professionals have not negotiated to offer services at a plan’s rate. As a result, patients pay more for the treatments they receive.

  • Premium:

    A premium is the amount that must be paid in order to keep insurance coverage. These payments may be due monthly, quarterly, or annually.

  • Preventive care:

    Preventive care is designed to keep patients in good health and avoid illness and disease through services such as annual checkups, mammograms, and colon cancer screenings.

  • Referral:

    A referral occurs when a doctor writes an order for a patient to receive services from another provider. For example, a primary care physician may refer a patient to a specialist for treatment of a specific issue.

  • Urgent care:

    When a patient gets urgent care, it means they have a condition that needs immediate treatment, but is not serious enough to require an emergency room visit.

Steps for Using Your Health Insurance

No matter where patients get their health insurance, there are procedures they need to follow in order to receive services. The following explains what some of those procedures are.

  1. Make sure you sign up for which insurance you choose by the deadline:

    The enrollment period to sign up for insurance is determined by the plan, so people need to enroll by the deadline to ensure they get the plan they want. In some cases, there may be a special enrollment period that allows people to sign up after the main period deadline has passed.

  2. Keep up with premiums:

    In order to keep receiving their coverage, people must keep up with their premium payments. Late payments can result in an account being terminated.

  3. Select a primary care doctor and understand how it works:

    A primary care doctor will oversee all of the care that patients receive, so they are required to choose a physician. Insurance plans provide information on the available doctors so people can choose one they feel comfortable with.

  4. Find a pharmacy that takes your insurance:

    In order to pay the price for prescriptions that a health care plan offers, people should find a pharmacy that accepts their insurance. Patients can get a list from their insurance company, and they should keep in mind they will pay more if they get their prescriptions from a pharmacy that does not take their insurance.

  5. Pay attention to your explanation of benefits (EOB):

    People should understand what services are covered by their plan, so they should review their explanation of benefits and ask their insurance company any questions they have.

  6. Understand what is and what is not covered:

    Everyone has different needs, so they should understand what the plans they’re considering cover so they can make the right choice for them. When looking at plans, people should make a side-by-side comparison to understand what each plan does and does not cover.

  7. Hang on to your insurance card:

    When people sign up for insurance, they will receive a membership package that may include an insurance card. Patients should first make sure that all of the information on the card is correct and then hang on to the card because they will need it every time they visit a doctor.

  8. Prepare for your first appointment:

    When going to a doctor for the first time, it’s important for patients to provide their medical history, as well as their family’s, so the doctor is aware of any problems they may have. Also, patients should prepare a list of their concerns and goals they want to discuss.

Health insurance is a great safety net for students to have available when they get ill, but it’s also important for them to take steps to maintain their good health. In the guide below, we offer advice to students on how to adopt good eating habits, stay fit while on campus, and live an overall healthy lifestyle.

Experts Q&A

How have the changes to the Affordable Care Act impacted college students’ ability to get health insurance?

Merrigan
Students can remain on their parents’ policy up to age 26, so this is a definite improvement for them. It used to be they could only be covered if attending college. Now this applies, regardless of college. This also helps with pre-existing conditions since coverage is guaranteed for kids on their parents’ policy.

Ohman
In general, college students have always had it easy finding affordable health insurance. They tend to be younger, healthier, and in turn, enjoy lower premiums. Of course, many of the mandatory coverage provisions in the ACA increase premiums across the board, even for students who are younger and healthier as they, in effect, help to subsidize the more expensive older, sicker policy holders.

When looking for an insurance plan, what should students pay the most attention to?

Merrigan
Most will likely pay attention to the monthly premium; however, they should pay attention to the annual deductible, the co-pay rate and the max out-of-pocket they will have to pay. The lower the premium, the higher the deductibles and co-pays the student will have. It’s kind of like car insurance. Do I get a $250, $500, or $1,000 deductible? It comes down to what you can afford when you need it.

Ohman
Comprehensive major medical coverage is the most important part to get right. Coverage for serious and expensive items like surgeries, cancer treatments, and the like are already life changing from a health standpoint and shouldn’t need to be from a financial standpoint too.

What should they avoid when evaluating an insurance plan?

Merrigan
Make sure they understand the network they are joining. Many are very narrow and restrictive. They want as broad a network as possible.

Ohman
It can be easy for students to get lured in by cheap discount medical savings cards, but a discount card is not substitute for true comprehensive major medical health insurance.

How should students weigh one plan against another?

Merrigan
The key criteria are network depth and breadth, and then cost. For example, here in Springfield, Missouri, a student can get either the Cox Network or the Mercy Network. The Mercy one is broader and deeper because it includes all their hospitals and many in the surrounding area. Cox has several partner hospitals as part of theirs.

Ohman
Students can ask themselves what type of plan simply makes me sleep better at night: a high deductible plan with low monthly premiums, but no copays for doctor visits (i.e., so I pay the full cost of the doctor visit out of pocket) or a plan with higher monthly premiums, but small copays for the doctor visits (i.e., I only pay $25 to $50 for each doctor visit, rather than the full cost out of pocket)?

If the Affordable Care Act is repealed, what does that mean for college students and their options for insurance?

Merrigan
The biggest issue will be related to the pre-existing conditions language that exists right now. If you recall all the political ads, the issue over pre-existing conditions was the biggest health care factor.

Ohman
There is much speculation about what would happen if the ACA is repealed. One hotly contested item would be the ACA brought about change to require insurers to allow children to remain on their parents’ policies up until age 26, so if this changes, then students will be greatly affected.

What are the most important things college students should keep in mind about health insurance?

Merrigan
Most plans provide for what I call wellness things, such as vaccinations, annual physicals, birth control and other things that keep you healthy. The pharmacy benefit is also very important to make sure they use an in-network pharmacy. This will keep prescription costs lower. A lot of people overlook these benefits in their coverage.

Ohman
No student likes to imagine a serious illness or large medical bill; everyone thinks they are invincible when they are young, but they should ask themselves, in a worst case scenario where I have a large medical bill what is the maximum amount that I can afford to pay out-of-pocket? Then they should buy health insurance coverage to protect themselves against this situation.

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