Updated: May 22, 2024
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Health insurance coverage provides access to affordable healthcare providers and services and can protect you from health-related financial loss. However, new college graduates risk being uninsured. While some may look into getting coverage, others forego it until they land their first job.
For many recent graduates navigating health insurance can be confusing. Learn about your available options and what you need to look for to find the best health insurance plan for your needs.
College Grads & Health Insurance
Choosing your first health insurance plan can be challenging. However, understanding your options can help you find the right policy for your needs.
In 2020, approximately 94.1% of people ages 26–64 with a bachelor’s degree had health insurance coverage. Around 5.9% are uninsured.1
Of the adults aged 26–64 with health plans, 87.5% have private health insurance and 8.8% have public health insurance.2
The Affordable Care Act (ACA) allows dependent coverage up to age 26 under their parents’ coverage, even if they have graduated.3
The most common reason for having no health insurance is that coverage is not affordable. Among adults aged 18–29, 66.8% said that this is their reason for being uninsured.4
What happens to college students’ health insurance after graduation may vary. If you are 25-years-old or younger, you may still be covered by your parents’ policy. If you land a job with health insurance, you will be able to choose your coverage. However, if you turn 26-years-old and your employer does not offer a health plan, you are no longer part of your parent's insurance. At this point, you’d become uninsured. The following are some common health insurance instances for college graduates.
You’re covered under your parent’s plan.
Because of the Affordable Care Act (ACA), children can remain dependents under their parent's coverage until they’re 26-years-old. This applies to all employer plans and those available in the market. It also does not matter if the child has graduated from college.
You get coverage upon employment.
Depending on the employer, a recent graduate may receive health insurance in their employee benefits package. Typically, coverage will be based on what your company offers. You may need to submit paperwork to your human resources department to get coverage.
You become uninsured.
If you’ve turned 26-years-old, you can only remain on your parent’s insurance for up to 36 more months through the Consolidated Omnibus Budget Reconciliation Act (COBRA). After that, you will be uninsured. If you are older, you will have to find an affordable health plan after graduation.
Some schools offer affordable student health insurance plans while attending college. However, coverage typically ends upon graduation and can put students at risk of being uninsured. Fortunately, there are various options available to new college graduates.
When choosing your first plan, don’t let cost be your sole determining factor. The most affordable health plans are not always the best option. Spend time evaluating your healthcare needs, situation, and budget before deciding. Then, shop around and compare your options. You can weigh the pros and cons of each provider to find your best fit.
To help you get started, below are six health insurance options for new college graduates.
Before the ACA, young adults couldn’t be listed as dependents on their parent’s health insurance plan after college graduation. Under the ACA, dependents can remain insured under their parent’s plan up to their 26th birthday. This rule applies if the college grad is married, financially independent or living away from home.
The table below further explains this option.
Title | Description |
|---|---|
How does it work? | You can continue to be covered by your parent’s health insurance plan after you graduate as long as their plan covers dependents. This means you don’t have to search for new coverage immediately. |
Are you eligible? | Up until you turn 26-years-old, you’re qualified for coverage under your parent’s health plan. Once you’re 26 or older, you can no longer receive coverage. |
How can you get it? | If your parent’s plan covers dependents, they can add you to their health insurance policy. They may only be able to get it during the open or special enrollment periods. For more details on requirements, it’s best to contact your parent’s health insurance provider. |
Once you’re 26-years-old, you can no longer remain in your parent's health plan as a dependent and will need to purchase coverage. However, your coverage can be expanded up to 36 months after your 26th birthday through COBRA. Your parents' insurance provider must be informed within 60 days after you turn 26.
When you get your first job out of college, it’s important to discuss your health insurance benefits with your employer’s human resources department. If that is the case, you can get coverage partly subsidized by your employer. Depending on the type of plan, you may even have the option to add dependents.
Learn more about how an employer-sponsored plan works in the table below.
Name | Coverage Details |
|---|---|
How does it work? | These plans are subsidized, at least in part, by employers. Typically, insured employees pay for the premiums through payroll deduction. Depending on the type of plan your employer offers, you may get employee-only coverage or may be allowed to add dependents. |
Are you eligible? | Requirements may vary per employer. Some companies provide health insurance coverage as soon as an employee starts working and are typically offered to full-time employees. Review these details with your company’s human resources department for specific details. |
How can you get it? | This type of health insurance plan is offered through your employer. Typically, there’s an annual open enrollment period or special periods when employees are given a chance to enroll in an employer-sponsored plan or change their current coverage. |
ACA guidelines state companies with more than 50 full-time employees have to offer health insurance coverage. Some employers offer coverage as part of their employee benefits package. If you’ve recently been hired and are unsure of your company’s health benefits policy, speak with your human resources department. It’s advisable to also ask about other health benefits they might offer, such as dental plans, vision plans and wellness programs.
If you are over 26-years-old and your job doesn’t offer employer-sponsored plans, your best option is to get an individual plan. You can shop around and compare quotes from multiple insurance providers.
Additionally, you can choose what coverage to include based on your situation and needs. That said, qualifications may vary per insurance provider.
The table below details important considerations that can help you better understand individual health insurance.
Title | Coverage Details |
|---|---|
How does it work? | The policyholder can choose what individual health insurance coverage includes. You can opt for basic coverage or customize a plan to include more riders and services. |
Are you eligible? | Generally, you can purchase any individual health insurance plan if you want. However, there may be restrictions in terms of pre-existing conditions. Some insurers may deny applications if you have certain pre-existing conditions, such as cancer, diabetes, and pregnancy. |
How can you get it? | There are two ways to get individual health insurance. The first option is to buy a policy through your state’s health insurance marketplace/exchange. You can also purchase a plan through an agent, broker or directly from the insurance company. Check state regulations to find out if off-exchange plans are available. |
Purchasing a policy from a health insurance marketplace can ensure you get ACA-compliant insurance coverage and essential benefits. Some states have an exchange, but most use HealthCare.gov. Using a marketplace may also help you find saving opportunities, such as premium subsidies or cost-sharing reductions. You can only enroll in a policy or change your plan during the Open Enrollment Period or Special Enrollment Period.
Medicaid is a program funded by the federal government. It aims to help low-income individuals get access to healthcare. However, the state administers the program and determines eligibility. That means the program duration, amount and services depend on your location.
Learn more about Medicaid through some commonly asked questions in the table below.
Medicaid Questions | Medicaid Details |
|---|---|
How does it work? | Medicaid is a state-run program. That means each state has different regulations regarding the coverage type, amount and scope of services. There are mandatory benefits required by federal law. These include inpatient and outpatient hospital services, physician services, laboratory services and home health. |
Are you eligible? | Generally, a person can get healthcare through Medicaid if their income and family size fall under the qualified category. That may vary per state. For instance, 38 states expanded the coverage to adults earning up to 138% of the poverty level. |
How can you get it? | You can enroll anytime. Fill out the application form, which you can get from Medicaid or Health Insurance Marketplace. After filling out the form, your information is forwarded to your state agency. They will contact you about your enrollment and determine if you qualify for a plan. |
Medicaid programs follow federal guidelines. However, costs and coverage levels are based on state regulations. Before proceeding with an application, review the state regulations first to see if you qualify. You can also compare plan prices through the application form.
New college graduates under 30-years-old may also get a catastrophic health plan. You can get one through the Marketplace. This is an affordable option that offers low monthly premiums. However, it comes with very high deductibles.
This plan is best for basic protection. You will have access to essential benefits, certain preventive services and at least three primary care visits annually.
Learn more about this option in the table below.
Title | Description |
|---|---|
How does it work? | Catastrophic plans offer the same essential benefits as other plans in the Marketplace. Some also provide preventive services for free. Additionally, you can have at least three primary care visits annually before meeting the deductible. That said, most routine medical expenses will be paid by the policyholder. |
Are you eligible? | There are two ways to qualify for a catastrophic plan. First, you need to be less than 30-years-old. Second, if you are 30 or older, you’ll need hardship or an affordability exemption. |
How can you get it? | The process varies per state. That said, you may apply through the Health Insurance Marketplace. You may also find an insurance company offering this coverage. |
When buying catastrophic health insurance, it’s important to ensure the policy will cover ACA health benefits, so you receive the coverage you need. Additionally, it’s essential to read the fine print carefully. Don’t sign the policy agreement until you understand the details. Check the terms, fees, rates and coverage and watch for any restrictions on covered services.
A short-term plan is another alternative option for new college graduates looking for temporary coverage until they find a new policy. For instance, you’ve gotten a new job and the company’s benefits package includes health insurance, but there’s a 90-day waiting period before your benefits start. This is where short-term health insurance can help.
Name | Description |
|---|---|
How does it work? | As the name implies, this coverage is intended for a short time. Typically, these policies can last up to a year. In some states, you can get a good plan for three years. After that, you either renew your plan or look for another one. |
Are you eligible? | Eligibility requirements include passing a cursory medical underwriting. It’s usually a short questionnaire that features yes/no questions about medical events. |
How can you get it? | Short-term health insurance plans are typically available online. In some cases, you may also apply in person or by mail. You can either apply on websites offering various options or directly from an insurance provider. |
Before you get short-term health insurance, check your state’s availability, regulations and rules. They can vary state-to-state. For example, some states allow short-term plans to last 364 days. Others may allow three- or six-month coverage.
As a recent college graduate, you may find navigating health insurance options overwhelming. Generally, choosing a policy requires research and consideration, such as your healthcare needs and what’s best for your financial situation. To help you make well-informed decisions, explore the following six questions you should ask as you shop around for the best policy.
Coverage is an important aspect of insurance. It determines the healthcare services you can access. Generally, your plan should include 10 essential benefits. These are emergency services, hospitalization, laboratory tests, outpatient care, pediatric services (including vision and dental care), mental health and substance abuse treatment, preventive services, prescription drugs, pregnancy, maternity and newborn care, and rehabilitation services.
Take note of two main costs — premiums and deductibles. If you choose low premiums, you’ll end up with high deductibles. On the other hand, having high deductibles lower your insurance premiums. Deductible refers to the amount you pay out-of-pocket for your insurance to start.
Health plans typically have a network of medical care providers, including doctors, laboratories, clinics, hospitals and even pharmacies. Choosing a provider outside the network will lead to higher out-of-pocket expenses.
Before enrolling in a health insurance plan, evaluate your health condition. If you’re taking prescription drugs, it’s best to look for a plan and insurance provider that includes your medicine in their prescription formulary. This way, you can save money.
Health insurance plans have coverage limitations. Make sure you review these. You can find these details in the Summary of Benefits and Coverage (SBC). If there are certain parts of the SBC you find confusing, clarify them with your insurance agent or provider.
There are times when you’ll need help from your insurer. Whether you have questions about healthcare or need to find a nearby facility, it’s best to work with a provider offering excellent client support.
Cost is one of the biggest factors individuals consider when choosing an insurance plan. Depending on your age, location, plan type and coverage, you may have high premiums. There are certain steps you can take to find affordable insurance.
Shopping around can help you save money. Get personalized quotes based on your needs and circumstances from at least three providers. It would also help to consider various plan types and coverages.
Make sure you evaluate your and your family’s needs and financial status. If you think you can afford high deductibles, you may consider lower premiums. This will help you manage your monthly expenses better. However, you will have to pay more out-of-pocket when you visit a medical facility or a physician.
The Health Insurance Marketplace is a great tool for finding a plan. However, it may not always have the best prices. Consider getting insurance through a broker or agent. They can help you customize a policy to suit your needs. You can also compare their offer to what is available in the Marketplace.
Ask healthcare facilities if they can lower your medical costs. For instance, some facilities offer discounts for advance payment. If you are getting insurance directly from a company or through an agent, you may also ask if you are qualified for any discount offers.
The right time for new college graduates to buy their first health insurance is before they become uninsured. Losing coverage puts you at risk of financial loss in the event of a healthcare need.
That said, it still depends on your situation. For instance, if staying in your parent’s health plan is the option that makes the most sense financially, then it may be better to delay your purchase. However, if you are about to turn 26-years-old, you are likely to become ineligible to be included as a dependent. In that case, consider shopping for a policy.
Purchasing at a younger age
Some may think buying a health plan as a young person is unnecessary. Typically, they’re healthy and have no/few medical conditions. However, purchasing a plan when you’re younger comes with many benefits. For instance, you can get lower premiums and you may receive tax benefits for a longer period.
Purchasing in your 20s
Buying insurance in your 20s gives you access to more options and lower rates. You are also less likely to have critical health issues and the probability of getting denied coverage is decreased.
Purchasing in your 30s
Getting health insurance in your 30s can help you prepare for unexpected health-related problems. Additionally, since you are still young, you may still be qualified for lower premiums. You may also be entitled to tax benefits, which can help you manage your finances better.
As a recent college graduate looking for their first health insurance policy, you may find the whole process challenging and confusing. However, knowing what to expect and look for in a health insurance plan can help you determine the best coverage option for your needs. The following tips can help you get started.
Take time to review the options available to you. It’s important to review them before your current coverage ends. You need to decide and enroll during the open enrollment period or you risk being uninsured. Some special enrollment periods can occur, typically with a qualifying event such as moving, getting married, having a child or job loss. Certain plan types may also be available year-round.
Explore available plans that cover your preferred doctors and facilities. Going to a doctor or facility outside your chosen provider’s network can cost you more than visiting someone in the plan’s network. You can verify coverage by simply calling your doctor’s office.
To ensure your coverage is adequate, check to see if the plan complies with ACA requirements. This assures that you are getting essential health benefits.
Don’t forget to read the fine print. Check fees, rates and terms. For instance, the provider may have a waiting period. In this case, you cannot make claims during this period. Understanding all details is important to prevent any future coverage issues.
Explore various plans to find one that’s a good match for your budget. Consider all possible factors that may affect your finances, such as people depending on you financially or if you’re preparing for a significant life event. These can help you determine what coverage and plan you can afford.
Finding your first health insurance policy after graduating college can be a large undertaking. We spoke with industry leaders to provide expert insight that can help you better understand your insurance options as a new graduate.
There are various resources available to help you understand health plans, find the right option and get assistance or support. Learn more about health insurance in the following resources:
About Nathan Paulus
Nathan Paulus is the Head of Content Marketing at MoneyGeek, with nearly 10 years of experience researching and creating content related to personal finance and financial literacy.
Paulus has a bachelor's degree in English from the University of St. Thomas, Houston. He enjoys helping people from all walks of life build stronger financial foundations.
