The COVID-19 pandemic has driven home the importance of health insurance for everyone — including college students.
Even healthy young adults are vulnerable to illnesses, injuries, and contagious diseases. By February 2021, the CDC's COVID Data Tracker reported that as a group, young adults between the ages of 18-29 had more reported cases of COVID-19 than any other age group. In fact, young adults account for more than one in five COVID-19 cases.
The pandemic has left many college students scrambling, asking questions like, "Does health insurance cover COVID testing?" and "What about COVID vaccines?"
However, health insurance isn't only important because we're living through a pandemic. It also helps college students access preventative treatment at no cost and protects against the financial impact of an unexpected hospitalization or accident, though it doesn't cover all medical expenses.
But what options do college students have for buying health insurance? Do college students qualify for tax credits? And exactly how long can you stay on your parents' plan? Here, we walk through the health insurance options for college students so you can make an informed decision.
Why College Students Need Health Insurance
It's important for people of all ages to have health insurance. Medical bills are the number one cause of all bankruptcies in the United States, and health insurance helps limit the cost of a medical emergency or accident.
As Healthcare.gov points out, a broken bone can mean thousands in medical bills, and a three-day hospital stay might cost more than your annual tuition bill. Signing up for health insurance limits the risk of incurring enormous medical bills that could financially ruin a college student.
Signing up for health insurance isn't just a good idea — many schools also require students to provide proof of insurance.
Comparing Health Insurance Options
College students have several options when it comes to health insurance.
Healthcare Through Your College
First, many colleges and universities offer student health insurance plans. Student plans typically cover visits to the student health center, other on-campus services, and often the university's hospital system, if it has one.
These plans work well for students seeking a low-cost health insurance option. Many student health insurance plans meet the Affordable Care Act (ACA) requirements to cover preventative care and a range of medical treatments, including mental health care.
Healthcare Through Your Parents
Second, college students can stay on their parents' plans until they turn 26, thanks to the Affordable Care Act. Parents can add college students to their plan or simply continue to cover adult children between the ages of 18-26 on their current plan.
If you're already on your parents' plan, this option is the simplest solution for maintaining health coverage. You can stay on your parents' plan until you turn 26, even if they no longer claim you as a dependent, you're married, your employer offers health insurance, or you have children of your own.
Letting students stay on their parents' plans gives students more choices. For example, if you're working while in school and qualify for an employer-based plan, you can compare coverage and costs between that plan and your parents' plan, or you can compare student health insurance plans with your parents' plan.
Healthcare Through a Marketplace
You can also sign up for your own health insurance plan, either through the health insurance exchange in the state where you live or directly through an insurance provider. Students who do not qualify as dependents can independently apply for health insurance and receive income-based subsidies to cover the costs.
As for students claimed as a dependent, they can still apply for their own plans. However, doing so can affect eligibility for tax credits, since the formula will take their parents' income into account.
Catastrophic Health Coverage
Young adults under 30 can also apply for an income-based "catastrophic" health plan that covers serious illnesses or injuries.
These high-deductible plans do not offer the same coverage for routine wellness care or mental health care, but they do cover catastrophic situations that incur expensive medical bills, which can prevent bankruptcy.
How can you sign up for a catastrophic plan? Visit Healthcare.gov to sign up or learn more about the marketplace exchange in your state. Once you fill out the qualifying form, catastrophic plans will show up among your options for healthcare.
Medicaid Health Coverage
College students may also qualify for Medicaid coverage in their state. Medicaid provides health insurance for low-income Americans based on income and the federal poverty level.
Since states administer the program, the qualifying income threshold varies by location. The rules for students claimed as dependents on their parents' taxes also vary depending on the state. If your parents' income exceeds the threshold for Medicaid, you may not qualify.
Students should look up the Medicaid eligibility rules in their state to find out more.
Most health insurance options — a student health insurance plan, staying on your parents' plan, or applying for a plan on the exchange — offer essential health benefits.
Essential health benefits are the minimum requirements that a healthcare plan must include under the ACA. They include outpatient care, hospitalization, mental health care, laboratory services, and preventative care.
Medicaid also offers comprehensive health coverage, while catastrophic plans typically do not.
Choosing Health Insurance for College Students
Which option should students choose — staying on their parents' plan, signing up for a student plan through their college, or applying for health insurance through an exchange?
The right answer depends on your circumstances. Students with chronic health issues may prefer a more robust plan through their parents or the exchange, which offers bronze, silver, and gold plans based on coverage. Students with few health issues might opt for a less expensive plan through their college or for catastrophic coverage.
Which option is best also depends on your budget. Non-dependent college students with low incomes may qualify for free health insurance coverage through the exchanges, thanks to tax credits. They may also qualify for Medicaid.
For other students, staying on a parents' plan may be the most affordable option, especially if your parents already pay for a family plan. Finally, catastrophic health plans offer less coverage, but with a lower monthly price tag.
Using Health Insurance
It's not enough to simply have health insurance; you also have to know how to use it.
Choosing a student health plan through your college can simplify the process of accessing your benefits. However, it's a good idea to research whether the plan covers students during summers, breaks, and other times when they may not live close to campus. And if your campus closes down due to the pandemic, it may be harder to access healthcare.
You should also consider things like deductibles, out-of-pocket maximums, and whether or not local healthcare facilities are in network for your healthcare plan.
Deductibles and Out-Of-Pocket Expenses
Most private health insurance plans come with a deductible and an out-of-pocket maximum. You have to pay the plan's deductible before your insurance begins to cover costs. A low deductible often means a higher monthly charge for insurance, while a high deductible can lower your monthly payment but raise your overall costs if you end up needing medical care.
The out-of-pocket maximum is the maximum amount you'll pay for health insurance during the year of coverage. Your deductible, copayments, and any other fees for healthcare count toward this out-of-pocket maximum. Once you've paid that amount, your insurance covers 100% of your remaining services.
In-Network vs. Out-of-Network
Health insurance plans also define certain providers as "in-network." These providers charge a lower rate for patients insured through that plan, meaning the plan will cover more of the cost. It's important to research which facilities are in your insurance network; visiting an out-of-network provider can result in an unexpected bill. What's more, out-of-network care does not count toward your out-of-pocket maximum.
Unfortunately, even within a single hospital, some doctors might be in-network while others are out-of-network. If you end up with an out-of-network bill, you can file an appeal with your insurer.
It can be hard to compare healthcare plans. Is it better to choose a plan with a low out-of-pocket maximum but few in-network providers? Or a plan with low monthly payments but a high deductible?
Some plans only cover expenses at in-network facilities, or you might pay different rates for prescription medication depending on which pharmacy you choose. If you're on your parents' plan but live in a different state for college, your plan may not cover providers in your state.
Whatever health plan you choose, spend some time reading up on what your plan does and doesn't cover. If you experience a medical emergency, you won't have time to look up which hospital is in-network, so it's best to know beforehand.
In the end, paying for health insurance is a small amount compared to the cost of bankruptcy or sky-high medical bills. Whatever option you choose, make sure you budget for health insurance in college.
Genevieve Carlton holds a Ph.D. in history from Northwestern University and earned tenure as a history professor at the University of Louisville. An award-winning historian and writer, Genevieve has published multiple scholarly articles and a book with the University of Chicago Press. She currently works as a freelance writer and consultant.
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