With concerns over job searches and post-college plans dominating the thoughts of soon-to-be graduates, health insurance should be among the least of their concerns. And while most of us have plenty of time to put off this worry, knowing there are valid options available can alleviate a little bit of stress for seniors rapidly approaching their looming graduation.
“Obamacare,” the popular name for the Affordable Care Act, was signed into law by the president in 2010 and radically redefines the way the country approaches health insurance in more than 2,000 pages of legislation.
Under the new law, each state was required to set up health care exchanges – online marketplaces where consumers could see private health insurance providers plans side by side.
Graduating students, especially if they’re low-income and not under their parents’ insurance, should begin embracing the new health care exchanges as tools to stabilize their financial future and give themselves affordable health insurance.
The Affordable Care Act requires everyone in the country to have health insurance or pay a fine to the Internal Revenue Service.
However, those with insurance provided by their employers, schools, or other institutions are unaffected, so long as they meet what the federal government calls “minimum essential benefits.” In addition, if you have family insurance, the provider must allow children to stay on their parent’s benefits package until they’re 26.
But as soon as a student graduates from school, for example, provided their family does not have a plan, they will have to comply with the mandate to have coverage.
The average college graduate makes an average of $45,000 a year after graduation, according to the National Association of Colleges and Employers.
So you’ve got your first job, and you want to see your options. You type in your information in on Covered California‘s website – the exchange marketplace for the Golden State – and you’ll be prompted to look at one of four tiers: bronze, silver, gold and platinum.
As you ascend the ladder, care goes up, but at a cost. Bronze, for example, has the cheapest monthly premiums, but also has higher out-of-pocket costs, whereas silver is the opposite.
As a California resident in Los Angeles making $45,000 you’d pay around $160 to $200 a month for good healthcare coverage under the bronze or silver plans.If you’d like to pay more, the higher plans are available, but at a correspondingly higher premium. For graduates making less than this average, chances are that federal tax credits will come into affect to make your insurance affordable.
So your health insurance costs would come out to about $2,400 a year, or about 5.3 percent of your annual income. The federal government defines an “affordable” healthcare plan as one that takes less than 9.5 percent of your income.
Paying $2,400 a year for the security of knowing your medical costs won’t bankrupt you is a huge step forward, especially for lower-income students who may not have been used to the luxury in the past.
For students who are not in danger of graduating, the logistics change. The UC Student Health Insurance Plan meets every federally mandated healthcare requirement for a little over $1,500 in premiums annually.
Say you were to opt out and try your luck in the exchange.In order to do that, you must be financially independent, meaning your parents do not claim you as a dependent on their tax returns, and you make over $16,000a year.
Anything less, and you would be getting insurance from Medi-Cal, which is another government program but has limited doctors and hospitals available in its network.
At $10 an hour, you’d have to work roughly 31hours a week, on top of your schoolwork, to earn $16,120.
At that income, only bronze and silver plans are considered “affordable” to you. The bronze plan, however, doesn’t qualify for the SHIP waiver due to higher out of pocket costs, and premiums for silver plans check in around $150 month.
With a tax credit though, it averages to about $55 to $60 a month. Extended over a year, you’d be looking at about $720, $780 less than UC SHIP for the same essential care.
One crucial difference though is access to particular hospitals, since UCLA is not “in-network” on the exchanges. This means your insurance won’t cover costs at the Ronald Reagan Medical Center. UC SHIP, on the other hand, does.
Basically, you have to meet strict criteria to get the discount. You must receive no assistance from your parents or not have family insurance, you need to work almost full time and the financial aid office must not cover your UC SHIP premium.
In other words, if you’re a first-, second- or third-year student, chances are you don’t even need to bother worrying about what Affordable Care Act is or does yet.
Once you approach graduation though, it’s worth a look.
The new health care law isn’t perfect, but its a boon for graduating students, especially those from low-income families who aren’t used to the stability of guaranteed affordable care. For them, the Affordable Care Act will serve as a valuable safety net.