Are you a college student (or a graduate student) looking for inexpensive health insurance options?
Maybe you're going off to college for the first time, or maybe you're an older student who no longer gets healthcare under your parent's insurance?
If so, this guide outlines what your options are, and when you should consider these options.
Parent’s Health Insurance
If you’re under age 26 (or age 29 in New York), your parents can generally keep you on their insurance plan. Generally, if you’re going to school in-state, your parent’s health insurance plan will cover all your medical needs. If paying for you isn’t a financial hardship for your parents, this can be a cost-effective way for you to stay covered.
But before you decide this is definitely the coverage option for you, consider a few drawbacks. Many health insurance plans are state-specific, and the in-network doctors may be limited to a few near your parent’s hometown. Students that are headed out of state may want a different or supplemental insurance option. This can be especially important to consider if you’ve got a chronic condition that may require regular appointments.
Another drawback to being on your parent’s insurance is the cost to your parents. Some parents may not be able to afford to pay for your insurance. Before assuming that your parents are willing to keep you covered, have a frank conversation about the costs and whether your parents can handle them. If you’ve got a decent job while you’re at school, you may want to consider reimbursing your parents for the cost of keeping you covered.
School-sponsored insurance programs are often a good fit for international students who need health insurance coverage while in the United States. The plans tend to be fairly affordable, and after paying for the premiums, coverage at the on-campus medical centers may be free or very inexpensive. Coverage tends to run from the start of one semester to the end of it (with up to a few weeks of overlap).
However, school-sponsored insurance plans aren’t perfect. If you need to see a specialist, the specialist may not be covered or only be covered at a higher rate. Some school insurance plans allow you to add dependents (including your spouse or children), while others do not.
Additionally, school-sponsored insurance isn’t always the most cost-effective option, especially for students who need insurance for a spouse or dependent children. Before you buy school-sponsored insurance, be sure to compare the plan to alternatives. Even though you’re eligible for school-sponsored insurance*, you (and your spouse and children if applicable) may be eligible for health insurance subsidies or even free health insurance.
For example, you may qualify for free health insurance (Medicaid) if you are a legally “independent” student who has a fairly low income. Additionally, students who are also parents may find that children qualify for CHIP (Medicaid for children). Before enrolling in your school health insurance plan, be sure to fill out an application on the healthcare exchange (HealthCare.gov or your state’s equivalent) to learn the cost of options available to you.
*It’s common for graduate students to receive paid health insurance as part of their scholarship. The health insurance is typically classified as student health insurance rather than employer-sponsored health insurance. That means that the student and/or their dependents remain eligible for subsidies or free health insurance. However, you should double-check that your insurance is considered school-sponsored insurance not employer-sponsored insurance. If it is employer-sponsored insurance, you will not be eligible for certain subsidies.
If nobody claims you as a dependent on your taxes, and you don’t live with your parents, you may qualify for free health insurance through Medicaid. Medicaid is typically reserved for low-income earners (which includes many college students who are focused primarily on their studies). Your ability to qualify for Medicaid will depend on whether you’re a dependent (by tax standards), whether you live with your parents, your income, and other factors.
If you’re a student with a spouse or children, your spouse or children may qualify for Medicaid even if you get your insurance elsewhere. You can apply for Medicaid through the Federal healthcare exchange or through your state’s exchange.
Higher-earning students, and those who live outside their parent’s state, may find that buying health insurance through the healthcare exchange may be their best option. When you buy insurance through the healthcare exchange, you may qualify for premium tax credits.
Your premium tax credits depend on a few factors:
- Your household income (which includes your parents’ income if you are a dependent)
- Your household size (including your parents’ if you are a dependent)
- Whether you’re eligible for employer-sponsored health insurance in your state
If you don’t have employer-sponsored insurance, and your parents’ insurance isn’t your best option, a plan through the healthcare exchange could be a good option for you.
Catastrophic Coverage Plans
Are you healthy, under age 30, and a high income-earner? If so, a catastrophic health insurance plan (available through the healthcare exchanges) could be a decent option for you.
Catastrophic plans have fairly low monthly premiums (but you can’t use a premium tax credit to reduce the premiums), but very high deductibles. The plans cover certain preventive expenses, but you’ll have to pay for most medical expenses out of pocket.
While the high deductible is a major drawback to these plans, they may make sense for high earners who need to buy their own health insurance. Just be sure this is truly your best insurance option.
Often, a school-sponsored health insurance plan will offer better coverage at a similar or even lower cost. And, if your income is less than 400% of the Federal poverty line ($49,960 for a single person in the lower 48 states), you’re probably better off buying a traditional insurance plan through the healthcare exchanges.
The last type of insurance for college students to consider is employer-sponsored health insurance plans. Several large employers offer health insurance as a benefit to employees who work full- or part-time. Depending on your working schedule and your employer’s health insurance policies, you may qualify for this insurance.
If you (or your spouse) qualify for employer-sponsored health insurance, you won’t qualify for tax credits through the healthcare exchange. However, you may still qualify for Medicaid, school-sponsored insurance, or your parent’s health insurance plan.
The quality and cost of employer-sponsored health insurance plans vary by employer, so be sure to compare your option (if you have one) to other options.
Health Sharing Ministries
Health sharing ministries are an alternative to insurance but act in very much the same way. These are organizations in which the members of the organization share in the healthcare costs of the organization.
These ministries are exempt from the individual mandate requirement, and thus if you use one, you don't face a tax penalty. These programs, though, typically require adherence with specific religious or other principals, and may not be suitable for everyone.
There are also risks of not getting the coverage you need, because you don't meet certain requirements.
However, most users of health sharing ministries are extremely happy with the cost and care they receive, and this is an incredibly popular option for young adults - especially those who are self employed or are active in the gig economy and don't have access to other insurance.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here and here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.