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10 things millennials should know about health insurance

Even if you’ve done it many times, buying health insurance can be confusing. Now imagine you're a millennial signing up for health insurance for the first time in your life.

Researchers at the University of Pennsylvania found that even college-educated, technically savvy adults in their 20s and 30s have a tough time navigating Healthcare.gov, the official site of the Affordable Care Act (ACA).

The researchers surveyed 30 adults, ages 19 to 30, who were interested in signing up for health insurance and interviewed them before they completed their enrollment and again about a month later.

"We found that half of the participants could not define 'deductible' and three-quarters couldn't explain 'coinsurance,'" says Charlene Wong, a University of Pennsylvania pediatrician who led the study, which was published in the Journal of Adolescent Health in June.

Unfortunately for millennials, terms like “deductible” and “coinsurance” are not unique to the ACA. They are part of basic health insurance lingo, which means people need to be familiar with these terms no matter where they buy their insurance.

Dr. Wong says that misconceptions on these terms could leave young people exposed to financial risks down the road.

For example, she says, one young man thought the high-deductible health plan he was buying would cover his first $6,000 in medical expenses when it was the other way around: He had to cover the first $6,000 in costs under the plan.

"Anyone who doesn't understand the health insurance terms is going to have a difficult time making the best decisions for themselves when they shop for health insurance," Dr. Wong says.

Here are 10 things about the ACA and health insurance that millennials should know before they begin shopping for policies.

1. What is a deductible?

This is how much you pay out of your own pocket for most medical services before your insurance kicks in.

For example, if your plan has a $1,000 deductible, your insurance won't pay any bills until you've spent this amount. (Note: Deductibles may not apply to some preventive services such as wellness visits and vaccines.)

2. What is coinsurance?

This is your share of any claim for a medical service. For instance, you might pay 20 percent of the negotiated cost of your service and your insurer pays the remaining 80 percent. You start paying your plan's coinsurance once you've met your deductible.

Often, the lower your monthly premiums are, the higher your coinsurance will be.

3. What are premiums?

Premiums are the payments you make to maintain your policy.

4. What is a copay?

For some services, an insurer may require you to pay your health care provider a copay, which typically consists of a flat fee. For example, many policies have a $30 to $40 copay for each doctor’s visit. Copays are typically higher for visits to specialists or emergency rooms.

Your plan can require you to pay copays and coinsurance. Copays are often necessary when purchasing prescription medications. If you see a doctor regularly for a chronic health condition and are on medication, look for a plan that has low copays for those visits and for your prescriptions.

5. When can I sign up for health insurance?

Under the ACA, you can generally buy health insurance only during open enrollment. Open enrollment for ACA coverage in 2016 starts Nov. 1, 2015 and runs through Jan 31, 2016.

However, you may be eligible to enroll at other times if you qualify for a special exception. Exceptions are granted for a number of reasons, including if you get married or divorced, have a child, change jobs or move to a new state.

6. Do I have to buy my insurance in the Health Insurance Marketplace?

If you are a U.S. resident and don't have access to health insurance coverage elsewhere – through work or your parents, for example – you can buy health insurance in the government-run Marketplace or directly from a health insurance company.

ACA premium subsidies are only available for polices purchased from the Health Insurance Marketplace.  These subsidies can lower the cost of health insurance for those who qualify. To be eligible for subsidies, a person’s income must not exceed 400 percent of the federal poverty level. For singles, that equals $46,680 for 2015 coverage and $47,080 for 2016.

Plans sold outside of the Marketplace must offer the same minimum benefits and may offer a wider network of providers, a better price or both. So it’s wise to shop both in and out of the Marketplace to find the best health insurance plan for your needs and budget, particularly if you don’t qualify for government subsidies. You can compare health insurance quotes on Insure.com and other sites.

7. What happens when I turn 26?

Under Obamacare, you may be covered through your parents' health insurance until you are 26, at which time you will have to get insurance on your own. You may qualify for special enrollment if your birthday falls outside of the open enrollment period.

Start shopping before you turn 26 so your new plan starts when your old one ends to avoid any gap in coverage. If you enroll in a Marketplace plan before the 15th of the month, your coverage will start the first of the following month. For example, if you need coverage starting Aug. 1, make sure you are enrolled no later than July 15.

8. Does my student health insurance plan qualify under Obamacare?

Maybe, says Kev Coleman, director of research and data for HealthPocket, an insurance research site.

"Check with your school's health plan administrator to see if the plan meets the requirements of the Affordable Care Act," he says.

To qualify, the plan must cover preventative services (wellness visits, vaccines) and essential services such as emergency treatments, hospitalizations, and maternity and newborn care.

9. What if I’m insured through work and my parents' plan?

When you have two insurance plans, one is primary and the other is secondary. The plans will coordinate coverage. When you’re insured by both a workplace plan and your parents’ plan, your work plan will be primary and your parents' coverage will be secondary.

“You can't have two health insurance plans covering the same benefits," Coleman says.

The primary plan pays your claims minus deductible, copay and coinsurance. Your secondary plan may pay some of the unpaid balance after you've met its deductible.

There may be no real benefit to having two plans if you have to pay premiums for both, Coleman says.

10. Should I consider a catastrophic plan?

This type of plan protects you from worst-case scenarios such as a costly accident or serious illness. It kicks in only after you have paid for a lot of care on your own. Catastrophic plans still cover preventative screenings and shots. You may be eligible for this type of plan if you're under 30.

However, if you buy a catastrophic plan in the Marketplace, you won't be eligible for premium tax credits. You will pay the standard price for this type of plan. Catastrophic plans may not be much less expensive than entry-level plans in the Marketplace, Coleman says.

More from Beth Orenstein here

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