VII. Key Issues: Regulation & Reform >> C. Health Reform >> Affordable Care Act (ACA) >> ACA and Households >> Impact on Young Adults (last updated 11.12.14)
1. Overview of Young Adults
2. General Impact of ACA
3. Major Provisions Affecting Young Adults
4. ACA and Taxes
Overview of Young Adults
- In 2012, 36% of millennials age 18-31 were living with their parents. Such individuals are sometimes called “basement grads.”
General Impact of ACA
- Young adults under age 26 can now be insured as a dependent on their parent’s health insurance. The only exception is if the parent has an existing job-based plan and the young adult can get his/her own job-based coverage.
- The law will require young adults to buy insurance. Due to restrictions on age rating, however, young adults will pay higher premiums for any coverage they obtain than they would prior to the law’s passage. These higher premiums will allow older individuals to pay lower premiums.
- Young adults with flexible spending accounts also will face higher expenses due to restrictions on such accounts.
- New health plans must now cover certain preventive services without cost sharing, including contraceptives.
- Starting in 2014, if young adults who are unemployed with limited income up to about $15,000 per year for a single person (higher income for couples/families with children), may be eligible for health coverage through Medicaid.
- Starting in 2014, young adults with income less than the equivalent of about $43,000 for a single individual who work in jobs that do not offer affordable coverage, may get tax credits to help pay for insurance. (See also Research and Analysis below)
- Starting in 2014, young adults whose employer doesn’t offer insurance will be able to buy insurance directly in an Affordable Insurance Exchange.
Major Provisions Affecting Young Adults
- Health Coverage for Older Children. Health coverage for an employee’s children under 27 years of age is now generally tax-free to the employee. This expanded health care tax benefit applies to various work place and retiree health plans. These changes immediately allow employers with cafeteria plans –– plans that allow employees to choose from a menu of tax-free benefit options and cash or taxable benefits –– to permit employees to begin making pre-tax contributions to pay for this expanded benefit. This also applies to self-employed individuals who qualify for the self-employed health insurance deduction on their federal income tax return. Learn more by reading this news release or this notice.
- Restrictions on Health Spending Accounts. Starting in 2011, individuals will no longer be able to use tax-advantaged money from an FSA, a health savings account or a health reimbursement account for over-the-counter drugs that are not prescribed by a doctor. Starting in 2013, the health-care-reform law caps annual FSA contributions at $2,500 per year (previously, there was no maximum contribution amount for medical FSAs).
- Young Adults and the Affordable Care Act (HealthCare.gov)
- The Foundation for Health Care Coverage, Health Care Options Matrix™ is the only hand-held guide available that outlines all of each state’s public and private health coverage choices for individuals and groups in almost every demographic profile, as well as offering a reference list of program contact information. A separate profile is available for each state.
- Endowment for Health Pilot | Health Reform Resources by Age Group (child, young adult (18-26), adult, mature adult (50-64), senior (65+)
- Kaiser Family Foundation, Health Reform Subsidy Calculator estimates the size of the premium subsidy for individuals obtaining coverage through the exchange.
Research and Analysis
- How Will Consumers be Affected? (Urban Institute)
- The Effect of Health Reform on Drug Prices (Congressional Budget Office)
- 18-34 Year-Olds Can Face 41% Narrower Income Bracket to Qualify for Obamacare Subsidies. HealthPocket examined subsidies for 18 to 34 year-olds in eight major cities across eastern, central, and western United States. In every city examined, young adults under age 35 could not obtain premium subsidies for marketplace health plans within the complete income bracket specified by the Affordable Care Act. On average the maximum income at which young adults could qualify for a premium subsidy was $31,744. This average is $14,216 below the highest subsidy-eligible income stipulated by the Affordable Care Act. (HealthPocket, 3.12.14)
- HealthReformReport.com, Individuals includes consumer-related health reform news.