How Millennials Can Use Obamacare to Save Money

Will Obamacare increase your insurance rates if you’re younger? Department of Health and Human Services Secretary Kathleen Sebelius seems to think it might. This seems likely, since they will be subsidizing the health insurance plans of Boomers and retirees. In any case, for a lot of millennials — particularly the roughly 13% who are unemployed — paying $200/month for health insurance is not affordable. (If anyone knows their approximate insurance rates, please feel free to report them. For someone with my profile, the cheapest insurance quote I found through calling around in the very bureaucratic world of health insurance sold in the $200 range.)

Assuming these numbers are correct, a single millennial might end up paying somewhere around $2,400 per year for health insurance. For those lucky enough to have a job, that is probably roughly 10% of their salary. But there are ways to save money under Obamacare, and to have your health guaranteed.

One thing about Obamacare is that paying the tax for not having health insurance is currently significantly less than the cost of having it. As it now stands, you will only have to pay $95 for not having health insurance in 2014. After that point, the tax for not having health insurance will rise, and it becomes more difficult to calculate. Nonetheless, it will probably always be lower than the cost of purchasing health insurance. Considering that the minimum tax for a single will be around $700, most millennials could be expected to be taxed in the high hundreds for foregoing health insurance.

At this point, readers might be wondering why bother. After all, why not pay a few thousand dollars for the health insurance instead of a few hundred for not having it? The answer is because you can now enroll in a health insurance plan at any time. Obamacare forbids discrimination based on pre-existing conditions and, therefore, millennials who get sick can enroll in Congress’s Pre-Existing Conditions Insurance Plan. (Admittedly, this plan has been having trouble with its revenue flow recently, but it will probably be replenished soon enough.)

There is hope for families as well. For a family of three, the cheapest insurance plan I could get a quote on would cost roughly $7,000 per year. And according to the New York Times, the average annual cost of employer-based health insurance for families is currently $4,134, though this will likely rise. The reason is because the healthcare bill only requires that employer-based health plans for individuals be affordable. Plans for families can cost however much the employer wants to charge for them.

Fortunately, the administration is not requiring that low-income families have health insurance, or as Bruce Lesley of First Focus says, “The administration recognizes that the cost of family coverage will be unaffordable for many families. They will not have to pay the penalty.” Essentially, what this means is that families may not have to pay for health insurance at all, since the law forbids discrimination based on pre-existing conditions for them as well.

In other words, should a family member become sick, a family could enroll in a health insurance plan and get the coverage that they need at the same equitable rate as everyone else. While insurance rates are likely to rise for families, there is no need to participate in that marketplace until there is a need for its products.

Will the Affordable Care Act negatively impact millennials? It will almost certainly send their insurance rates upward, but that does not mean that you will have to pay for them. As long as the penalty tax is kept low and the ban on discrimination against pre-existing conditions stays in place, the best health care coverage will always only be one application away — and waiting until you need it may cost you less than $100 per month.