First of all, if you are 26 years or younger, you are allowed to be on your parent’s health care plan. So if you can, you should without a doubt do that.
For other students, Millennials, or young adults from Generation Y the dilemma is whether to sign up for ObamaCare or pay the penalty. If you are healthy I think the best choice is to just pay the penalty. Here’s why:
1) You can still pay cash if you need to go to the doctor. In fact, it is likely that doctors will love you more if you just pay with cash (credit card, debit card, etc.) because they won’t have to deal with any ObamaCare insurance that will underpay them.
Did you know that doctors AND hospitals have a cash price which is always less than the insurance price? That is because when they have to get paid by an insurance company, they never know how much they will get paid and it is always less than what they want. When a cash customer comes in, they love it because they can charge you exactly what they need to get paid and know they will get the full amount.
2) Many healthy young adults never go to the doctor because they don’t need to. They might go once or twice a year if they get sick enough to need medication. Paying for those individual visits (or none at all) will be way cheaper than paying $100 to $200 per month and then ALSO having to pay a deductible on top of that when they do go with ObamaCare.
ObamaCare is a horrible financial decision for most healthy millennials. The numbers just don’t add up and that is why President Obama wants so desperately for them to sign up for it: ObamaCare makes money from them that will go towards paying for older people’s health care. Just the fact that Obama is now targeting the younger generation so heavily should tell you that something is wrong and it is NOT a good deal for you.
3) The unemployment rate for the under 30 age group is at least double the national rate and probably even higher. That means many are struggling and don’t have an extra $1,500 to $3,000 per year to shell out for ObamaCare premiums. Just finding money to pay the monthly rent is hard enough right now and insurance on top of that is NOT affordable. It is just cheaper to pay the penalty and pay out of your pocket if you need medical attention.
4) If you don’t make enough money to pay taxes, there will be no penalty. The IRS is the the department that will be administering the tax penalties for those who don’t have ObamaCare insurance so anyone who doesn’t file is in the clear. Additionally, if you don’t make enough to pay taxes you might be eligible for expanded Medicaid if you live in one of the states that has it.
4) What if you get into a big accident? Won’t it bankrupt you if you need health care? Most younger people sadly have very little money to their name. Many are even in debt. So bankruptcy to them doesn’t meant the same thing as it would to someone who is worth a million dollars. If you have nothing (or very little), there is no real penalty for not being able to pay.
Admittedly, #4 is the one that is sort of a gamble. If you are young, healthily, and love to race sports cars or cliff dive maybe you should be buying ObamaCare insurance. Your chance of getting hurt is great enough that it might be smart. But for most sedatary people who do not put themselves in daily danger, the risk/reward of buying insurance becomes less clear.
The Risk – Reward Bottom Line
In the end, whether to get ObamaCare or pay the penalty is a classic risk / reward situation that every healthy young person has to decide for themselves what they are comfortable doing. Please note that throughout this article I have often used the word “healthy” because those are the people who hardly ever go to the doctor and for whom ObamaCare makes little financial sense.
If you are not healthy and have the need for frequent or intermittant care, ObamaCare may be the best choice even if you don’t think you can afford it. Better to be safe than sorry. Also if you are a worrier and are concerned about what might happen if you get sick and are without insurance, then you should get it. Another reason for health insurance is if you have a family. That is a no brainer most of the time. Most importantly, you should do whatever allows you to sleep well at night and not worry.
Clearly though, for most of the healthy younger people in our society, ObamaCare is NOT a good financial deal. The first year penalty is $95 or 1% of your income (whichever is greater). You should figure in that penalty amount when making your decision. Also make sure you understand what deductibles are because you will need to fork over that