USA TODAY, in partnership with ABC News, is exploring the issues of being young and in debt in a six-week series that began Monday, Nov. 20. We’ve paired five twentysomethings with members of the Financial Planning Association who are lending advice. And we’re offering tips for managing debt, cutting expenses and saving. Follow the entire series and find online tools and resources at youngdebt.usatoday.com.
Young people tend to take more risks than older folks, which is why you don’t see many 50-year-olds competing in the X Games.
But even if you’re not planning to compete in the Skateboard Vert, you shouldn’t go a day without health insurance. Bad stuff happens, even to people who are young and healthy and feel invincible.
A serious case of pneumonia could cost you more than $75,000. A head injury from a car accident could set you back $45,000. Bills from a spinal cord injury could exceed $600,000.
Adults younger than 35 are nearly twice as likely to be uninsured as adults 45 and older, according to a report by the Blue Cross and Blue Shield Association. Twenty-seven percent of young adults in their 20s have no health insurance, according to a poll conducted by USA TODAY and the National Endowment for Financial Education.
Several factors contribute to the high uninsured rate among the young. Many young adults lose coverage under their parents’ plans when they graduate from college, leaving them uninsured until they find a job. Once they find a job, they may have to wait several months before they’re eligible for insurance — if their employer provides it at all.
Fortunately, there are ways to protect yourself from catastrophe without spending a lot of money. Some options:
•Short-term insurance. These policies offer health insurance for six months to a year. They typically cover major accidents and illnesses, but don’t cover preventive care and doctor’s office visits. Nor do they cover pre-existing conditions, so they’re not appropriate for people who have chronic medical problems, says David Andrews, a vice president at Assurant Health, which provides temporary policies. Premiums for a six-month plan range from $32 to $70 a month, according to eHealthinsurance.com.
Many plans allow you to pay a month at a time, so you can stop paying premiums when you get a job. Some are renewable, but the insurer may refuse to extend your policy if you filed claims during the previous short-term period.
•Individual coverage. Individual insurance policies are usually more expensive than short-term plans, but they’re a better option for people who need coverage for more than a few months, Andrews says.
If you’re willing to carry a high deductible — which means you’ll pay most of the costs of routine care — you can buy a plan with low monthly premiums. At HumanaOne, for example, plans for policyholders in their early 20s start at $40 a month with a $5,000 deductible, spokesman Mark Mathis says.
Some individual policies don’t cover doctor’s visits, while others require a co-payment. In general, though, you’ll pay higher premiums for a plan that covers routine medical and dental expenses.
•Coverage under your parents’ plan. States are increasingly extending the age at which children can remain on their parents’ insurance plans. In New Jersey, children can stay on their parents’ plans until age 30, as long as they live in the state and don’t have children of their own. In Utah, children can stay on their parents’ plans until age 26.
Staying on your parents’ plan is a good option if you’ve suffered from a serious illness or have chronic medical problems. Premiums for an individual policy will likely be prohibitive, and some insurers will refuse to cover you at any price.
•Coverage under COBRA. Even if you’re no longer eligible for your parents’ plan, you can extend coverage until you have your own insurance. Under the federal Consolidated Omnibus Budget Reconciliation Act, or COBRA, the insurer is required to allow you to purchase group coverage for up to 18 months. The downside: You must pay the entire cost of the premium, including the amount your parent’s employer pays, plus administrative costs. In 2006, the average cost of premiums for single coverage was $354 a month, according to the Kaiser Family Foundation.
But if health problems make you a poor candidate for an individual or short-term policy, COBRA may provide the only way to protect yourself until you find a job with health insurance. Maintaining continuous coverage is critical: If you become seriously ill while you’re uninsured, you may not be able to obtain health insurance in the future.
By Sandra Block, USA TODAY