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How will young adults and college students fare under Obamacare?

Q: My youngest child is 21 and graduated from college in May. My other daughter is 24 and is still a college student in Stockton. What are my options with them under the Affordable Care Act?

A: The good news, Simona, is that your daughters may have several options and their coverage could fall into place easily.

Or not.

Let’s cross our fingers and begin with “could fall into place easily.”

Starting in January, most Americans will be required to carry a minimum level of health insurance or pay a tax penalty. That includes your daughters and other young adults 18 and over.

One provision of Obamacare that already went into effect allows parents to keep their young-adult children on their insurance policies up to age 26.

“I suspect that’s the route that many college students are going to take,” says Steven Bloom, director of federal relations for the American Council on Education.

If that’s not an option, many universities offer health insurance that will meet Obamacare requirements, Bloom says.

But it could cost. My editor just received a bill for a semester’s worth of health coverage for his daughter, who attends Prescott College in Arizona: $767.

So, shop around because two major Obamacare-related changes coming in January could provide new, affordable options to young adults:

  • Medi-Cal, public health insurance for low-income Californians, will broaden its eligibility requirements, raising the income threshold and opening the program to those who were previously ineligible, such as childless adults.

This could be promising because young adults often don’t work full time – whether  they’re attending college or not – and may soon qualify.

Please note that if you claim your young-adult child as a tax dependent, your income will count toward your child’s income for Medi-Cal eligibility purposes, says Tony Cava of the state Department of Health Care Services.

The result? Your child may not qualify.  

  • When the state’s health insurance exchange, called Covered California, begins open enrollment in October (with coverage to commence at the start of the year), it will sell a variety of health plans. To make those plans more affordable, it also will offer sliding-scale tax credits to Californians earning between 138 percent and 400 percent of the federal poverty level (click here for FPL guidelines).

Young adults, even those who have access to college health plans, can purchase a plan from Covered California instead. Luckily, recent federal regulations clarified that those students will be eligible for tax credits if their incomes fall within the guidelines. 

But beware the dreaded tax caveat: For a student to be eligible for tax subsidies, no one can claim him or her as a dependent on tax returns.

To complicate matters further, the student won’t even qualify for the subsidies if he or she is merely eligible to be claimed as a dependent, says Anne Gonzales, a Covered California spokeswoman. 

(One way around that: If you as a parent qualify for tax credits, you can add your young-adult child to a family plan and receive financial assistance for premiums that way, Gonzales notes.)

Whew. Now you know what I meant earlier by “Or not.”

Here’s one final option: Covered California will offer a low-cost catastrophic plan for young adults under 30 and for individuals who cannot find affordable health coverage. (Click here to learn more about what’s considered “affordable.”)

All costs (except for preventive care and the first three office visits each year) will be out-of-pocket until the $6,400 annual deductible is reached.

Q: What about my daughter who just graduated?

A: She will have many of the same options as college students. And if she lands a job, her new employer may offer coverage. 

More campuses also may start allowing graduating students to remain on their health plan for a limited period, such as three to six months, Bloom says.

“Once that period is over,” he adds, “then former students, like all other Americans, are going to have to find health insurance.”

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Authors

Emily Bazar

Senior writer Emily Bazar is based in our Sacramento office, where she covers stories about the federal health care overhaul, Medi-Cal budget cuts, children's dental care and variation in the use of medical treatments.  Prior to joining the Center for Health Reporting, Bazar was a national reporter for USA Today, where she covered immigration, the effects of the current economic recession and other topics. Her first journalism job was at The Sacramento Bee. Over nine years, her beats included transportation, higher education, California politics, the energy crisis and immigration. In 2003, she was one of two reporters who produced an award-winning special project, “Liberty in the Balance,” which explored civil liberties after Sept. 11, 2001. She appears regularly on KQED’s Forum,Capital Public Radio’s Insight and other radio shows to discuss health policy. Bazar graduated from Stanford University.

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