Health insurance is something everyone needs, but for people under 65, finding the right coverage can sometimes feel confusing. Unlike those over 65, who are eligible for Medicare, individuals under 65 don’t have the same straightforward path to coverage. Whether you’re working, self-employed, or have other circumstances, it’s important to understand what options are available to ensure you and your family are covered in case of medical needs. In this blog, we’ll break down the various health insurance options for people under 65 and explain how each one works.
1. Employer-Sponsored Health Insurance
One of the most common ways people under 65 get health insurance is through their employer. If you’re employed full-time, your employer may offer a health insurance plan as a benefit. Here’s how it works:
- How it works: Your employer typically covers a portion of the premium cost, and you pay the rest. Depending on your employer, the plan may also offer coverage for your spouse and children. However, if the premiums are very high to cover your spouse and/or children, they may be able to get coverage elsewhere for less.
- Advantages: Employer plans tend to have better premiums, as employers often cover a significant portion of the cost. They also usually provide a range of plan options, so you canchoose one that best fits your needs.
- Things to consider: If you’re self-employed or your employer doesn’t offer insurance, you’ll need to explore other options.
2. Marketplace Health Insurance (Obamacare)
If you don’t have access to employer insurance, the Health Insurance Marketplace (often called the “Exchange”) is a major option for people under 65. It was created under the Affordable Care Act (ACA) and allows individuals and families to shop for health insurance plans.
- How it works: You can access the Marketplace at HealthCare.gov (or your state’s marketplace site if they have one). You’ll be able to compare different plans, including bronze, silver, and gold tiers, which differ in cost and coverage levels. Based on your income, you may also qualify for subsidies (financial assistance) to reduce your premium and out-of-pocket costs.
- Advantages: The Marketplace offers a variety of plan options, and the coverage must meet certain standards, such as covering essential health benefits (like hospitalization, prescription drugs, and preventive care). There are also no exemptions for pre-existing conditions which can be critically important for individuals with major health needs. Plus, you can apply for subsidies if you qualify, which can make premiums more affordable.
- Things to consider: Marketplace plans are typically only available during open enrollment, which happens once a year, unless you qualify for a special enrollment period (such as moving or losing other coverage).
3. Medicaid
Medicaid is a government program that provides health coverage for low-income individuals and families. If your income is low enough, you may qualify for Medicaid coverage, even if you’re under 65.
- How it works: Medicaid is run by both federal and state governments, and eligibility rules vary by state. In general, to qualify, you must meet income and other eligibility requirements (such as being pregnant, disabled, or a parent).
- Advantages: Medicaid is often free or very low-cost, making it an affordable option for those with limited income. It also provides comprehensive coverage, including doctor visits, hospital stays, prescriptions, and more.
- Things to consider: Eligibility is based on income and other factors, so not everyone will qualify. It’s important to check with your state’s Medicaid program to understand the specific eligibility rules in your area.
4. Short-Term Health Insurance
Short-term health insurance is designed to provide temporary coverage, usually for a few months to a year. This is typically used by people in transition—like those between jobs, waiting for other insurance to kick in, or those who need a gap coverage option.
- How it works: Short-term plans offer basic coverage for things like emergency care, doctor visits, and hospital stays. However, they often exclude things like maternity care, prescription drugs, and mental health services.
- Advantages: Short-term health insurance is much cheaper than traditional health insurance plans, which can be attractive if you’re between jobs or just need temporary coverage.
- Things to consider: These plans don’t provide the same level of coverage as standard insurance and may not cover pre-existing conditions or essential health benefits. They also often have higher out-of-pocket costs (like deductibles and copays).
5. Spouse or Parent’s Health Insurance
If you’re under 26, you may be able to stay on your parent’s health insurance plan, thanks to a provision in the Affordable Care Act. This option is available even if you’re not living at home, married, or financially dependent on your parents.
- How it works: If your parents have employer-sponsored insurance or a Marketplace plan, you can remain covered under their plan until you turn 26. This can be a great option for young adults who are still in school or just starting their careers.
- Advantages: Staying on a parent’s plan is often the most affordable option, especially if your parents have employer-sponsored coverage or a subsidized Marketplace plan.
- Things to consider: Once you turn 26, you’ll need to find your own coverage, so you’ll need to start planning ahead for your insurance needs.
6. COBRA Coverage
COBRA (Consolidated Omnibus Budget Reconciliation Act) allows you to keep your employer- sponsored health insurance for a limited time after you leave your job. If you lose your job or experience a reduction in work hours, you may be able to keep your existing health plan for a while.
- How it works: COBRA coverage typically lasts for 18 to 36 months, depending on the situation. You’ll pay the full premium cost, including the portion that your employer used to pay, which can make it more expensive than regular employer insurance.
- Advantages: COBRA lets you keep the same health plan you had at your previous job, which can be convenient if you’re happy with the coverage.
- Things to consider: COBRA can be expensive because you have to pay the entire premium. It’s a short-term solution and may not be the most affordable option for long-term coverage.
Catastrophic Health Insurance
Catastrophic health insurance is designed to protect you in the event of a serious accident or illness. It offers low premiums and high deductibles, which means you’ll pay a lot out of pocket before your insurance kicks in.
- How it works: Catastrophic plans are available for people under 30 or those who are exempt from other Marketplace plans because they can’t afford coverage. These plans cover three primary care visits per year and essential health benefits after you meet your deductible.
- Advantages: These plans are cheap compared to other health insurance options, and they provide coverage in case of a major health crisis.
- Things to consider: You’ll pay a high deductible before the plan helps with most of your medical costs, so it’s not ideal if you need regular care.
Final Thoughts: Choosing the Right Health Insurance for You
There are many health insurance options available to people under 65, and choosing the right one depends on your income, employment situation, health needs, and where you live. If you have access to employer-sponsored insurance, that’s often the best route. If not, consider exploring the Health Insurance Marketplace or looking into Medicaid if you qualify.
Make sure to compare plans, check for subsidies, and carefully review coverage details to find the plan that fits your needs. Health insurance can seem complicated, but taking the time to speak with an licensed, independent advisor can help make sense of the differences so you can understand your options which will help you make a more informed decision.
