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BROKE

They're young, healthy and broke — and soon they'll have to buy health insurance. What should tapped-out twentysomethings do?

Some may just do nothing. The annual fine for shrugging off the new federal insurance requirement, which is to begin in 2014, starts out at $95, depending on income. That's far cheaper than paying premiums.

But millions of young people will qualify for good deals on health care if they take time to sort through the law.

Many will get Medicaid coverage at virtually no cost. Others will qualify for private insurance at a fraction of the full premiums. And health plans offered under the law will limit individuals' out-of-pocket expenses to about $6,250 per year or less.

Depending on the outcome of the presidential election, the health care law might not be around in 2014. Still, with open enrollment for the law's new state-based insurance markets scheduled to begin next October, it's prudent to start considering the options:

START AT WORK

More than half of Americans already are covered through their jobs. But young adults have the nation's highest unemployment rate and also are more likely to toil in low-wage jobs without benefits.

Some employers, especially smaller businesses paying lower wages, may now drop their plans and expect their workers to get government help. Others may begin coverage in response to the law's penalties and incentives for employers, the Congressional Budget Office predicts.

LEAN ON MOM OR DAD

One of the law's most popular provisions, already in effect, ensures that parents with family plans can keep their adult kids enrolled until they turn 26, if the children don't have a suitable workplace option. The government estimates that 3.1 million uninsured young people already have gained coverage this way.

CONSIDER MEDICAID

Right now, Medicaid mostly covers children and low-income adults who are disabled, pregnant or raising kids. But the health care law will push states to expand Medicaid to also cover other adults with incomes up to around $15,000, adjusted for inflation in 2014. That's designed to account for about half of the 30 million people expected to gain insurance coverage under the overhaul.

But Florida's governor is among those who have vowed not to join the Medicaid expansion, so it's unclear whether this will be an option here.

THERE'S MORE HELP

Most people with incomes up to four times the poverty level — $44,680 for an individual or $92,200 for a family of four — will qualify for help to buy private insurance.

The lowest earners shouldn't have to pay more than 2 percent of their incomes toward insurance premiums for mid-level plans; those at the high end would contribute 9.5 percent.

For example, a single 26-year-old earning $16,000 might pay $537 toward the annual premium for a mid-level "silver" plan, according to estimates from the Kaiser Family Foundation. The rest of the premium would be covered by a $2,853 tax credit. (Deductibles and co-pays could cost up to an additional $2,083, depending on how much care the person needs.)

A 26-year-old earning $35,000 would pay $3,325 in premiums — $277 a month — for the same plan, after only a $66 tax credit. (And that patient might be on the hook for another $4,167 in out-of-pocket costs.)

CHEAPER BUT SKIMPY

For those under 30 there's a special option to buy "catastrophic" insurance with the lowest premiums but scant coverage until a deductible of about $6,250 is met. While it may be tempting, caution is advised.

"We really encourage folks to do their homework and look at the details of the plan," said Smith. "It's not just the premium. You have to look at what's being covered, what the deductibles are."

GO BARE?

People who would have to spend more than 8 percent of their income to buy basic insurance are exempt from paying a penalty if they go without.

For others who feel they can't afford or just don't want coverage, the penalties start off relatively low in 2014.

Private insurers have yet to set the prices for their 2014 plans. The Congressional Budget Office has estimated that premiums for the bare-bones plan, called "bronze" level, might average between $4,500 and $5,000 per year. Family plans might cost $12,500 per year.

Rates for young adults would be lower. Kaiser's cost calculator gives a ballpark estimate of about $3,400 for an average single 26-year-old who doesn't get subsidies.

In contrast, the first year's minimum penalty for an individual is $95; that's what a worker making $16,000 would pay. A $35,000 earner would owe $255 — not even a tenth of the estimated $3,325 in premiums.

In 2016, the minimum penalty rises to $695 and it's capped at a little less than 2.5 percent of taxable income. That's about a $1,600 fine for someone making $75,000 per year.



More than half of Americans already are covered through their jobs. But young adults have the nation's highest unemployment rate and also are more likely to toil in low-wage jobs without benefits.

Some employers, especially smaller businesses paying lower wages, may now drop their plans and expect their workers to get government help. Others may begin coverage in response to the law's penalties and incentives for employers, the Congressional Budget Office predicts.

One of the law's most popular provisions, already in effect, ensures that parents with family plans can keep their adult kids enrolled until they turn 26, if the children don't have a suitable workplace option. The government estimates that 3.1 million uninsured young people already have gained coverage this way.

Right now, Medicaid mostly covers children and low-income adults who are disabled, pregnant or raising kids. But the health care law will push states to expand Medicaid to also cover other adults with incomes up to around $15,000, adjusted for inflation in 2014. That's designed to account for about half of the 30 million people expected to gain insurance coverage under the overhaul.

Gov. Rick Scott is among those who have vowed not to join the Medicaid expansion, so it's unclear whether this will be an option here.

Most people with incomes up to four times the poverty level — $44,680 for an individual or $92,200 for a family of four — will qualify for help to buy private insurance. The lowest earners shouldn't have to pay more than 2 percent of their incomes toward insurance premiums for mid-level plans; those at the high end would contribute 9.5 percent. For example, a single 26-year-old earning $16,000 might pay $537 toward the annual premium for a mid-level "silver" plan, according to estimates from the Kaiser Family Foundation. The rest of the premium would be covered by a $2,853 tax credit. (Deductibles and co-pays could cost up to an additional $2,083, depending on how much care the person needs.) A 26-year-old earning $35,000 would pay $3,325 in premiums — $277 a month — for the same plan.

For those under 30 there's a special option to buy "catastrophic" insurance with the lowest premiums but scant coverage until a deductible of about $6,250 is met. While it may be tempting, caution is advised. "We really encourage folks to do their homework and look at the details of the plan," said Smith. "It's not just the premium. You have to look at what's being covered, what the deductibles are."

People who would have to spend more than 8 percent of their income to buy basic insurance are exempt from paying a penalty if they go without. For others who feel they can't afford or just don't want coverage, the penalties start off relatively low in 2014. Private insurers have yet to set the prices for their 2014 plans. The Congressional Budget Office has estimated that premiums for the bare-bones plan, called "bronze" level, might average between $4,500 and $5,000 per year. Family plans might cost $12,500 per year. Rates for young adults would be lower. In contrast, the first year's minimum penalty for an individual is $95; that's what a worker making $16,000 would pay. A $35,000 earner would owe $255. In 2016, the minimum penalty rises to $695. It's capped at about 2.5 percent of taxable income.

BROKE 07/11/12 [Last modified: Wednesday, July 11, 2012 10:07pm]

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