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Younger, healthier enrollees boosting ACA’s value to carriers

A Picture of Adam Weisshouse Adam Weisshouse
03/01/2016

When it comes to the Affordable Care Act (ACA), 18-34-year-old consumers are considered the ultimate prize for big insurance carriers. The enrollment of younger, healthier people, also known as “millennials or Young Invincibles (YIs), affects all Americans’ coverage. They’re less likely to use their insurance, compared to older, sicker beneficiaries. This balances out the insurance market’s risk pool, reducing carriers’ costs and all members’ premiums.

The downside is that getting millennials, the most uninsured age group, to purchase plans is difficult. At the start of the 2016 Open Enrollment Period (OEP), the government wanted to sign up a quarter of those 10.5 million uninsured Americans qualifying for coverage. And the Dept. of Health and Human Services (HHS), which oversees the nation’s healthcare, estimates that about half of those uninsured were millennials.

More millennials’ signing up

The Obama administration looks to have succeeded in its enrollment goals. About 2.1 million 18-34-year-old people had enrolled, compared to 1.1 million in 2015. All together, an estimated 11.6 million had enrolled, including the 38 states utilizing the government’s Healthcare.gov platform and those states and the District of Columbia running their own exchanges.

Beyond the desire to purchase policies, this third OEP also saw few technical issues, including website problems and long lines. “It’s been a good year. Compared to last year, more consumers are signed up for coverage, more consumers actively renewed their plans and more consumers had a smooth experience at HealthCare.gov,” said the CMS’ Lori Lodes.

Prior to the ACA’s start in Jan. 2014, millennials were limited to employer-sponsored family policies, which stopped at 18 years old (except for full-time students). However, this age group is less likely to have employer-based coverage. They’re also not typically eligible for Medicare and Medicaid. But thanks to Obamacare’s provision enabling people to remain on their parents’ policies until the age of 26, millions have gained access to insurance. And once off their parents’ policies, they’re more likely to enroll in their own policies.

Age, finances factors in uninsured rates

Some younger, healthier Americans haven’t been persuaded to purchase plans, which may be due to their financial situations. But their reputation as “Young Invincibles” may also play a part; these people may think that they won’t need health insurance.

There are also many millennials who enrolled just to avoid the substantial tax penalties for being uninsured. Known as the individual mandate, it’s imposed on consumers found to be without ACA-compliant coverage after Jan. 31, 2016, the last day of the Open Enrollment Period (OEP). Hardship exemptions may be available, but should they be imposed, you’ll pay the greater of:

  • $695 per adult and $347.50 per child, for a maximum of $2,085 per family; in 2015, the amounts were $325 and $162.50
  • 2.5 percent of your income above the tax filing threshold; in 2015, this was 2 percent

As the OEP has passed, the only option for millennials to get coverage would be if they qualified for a Special Enrollment Period (SEP), an enrollment extension period offered at any time. Consumers must experience a Qualifying Life Events (QLE), like marriage, relocation or childbirth, to qualify.

This year is the first since the ACA’s establishment without a government-sponsored SEP. The insurance industry felt they made setting prices more difficult. But certain states with their own exchanges, such as California and Maryland, have extended enrollment extensions. For these two states, beneficiaries can enroll until Feb. 6.

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