How Much Health Insurance Do I Need in My 20s?
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If you’re turning 26 and you’ve long relied on your parents’ health insurance to cover the costs of visits to the doctor, unplanned hospital stays, prescription drug fees and other medical expenses, it’s time to make a big decision: You must decide how much health insurance you need in your 20s and from where you can get this coverage.
If you’ve been covered by parents’ plan until now, this coverage will end when you turn 26. If your parents have a plan that they purchased through the federal government’s Health Insurance Marketplace, you have a bit more time: In most states, you can remain on this plan through Dec. 31 of the year in which you turn 26.
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For young adults, finding your own health insurance coverage can be intimidating. It can be especially difficult to determine how much coverage you need and what type of plan you need when you are still young. After all, you don’t expect to suffer from any serious illnesses when you’re in your 20s.
But be careful not to enroll in a health insurance plan that doesn’t offer enough coverage. The average cost of even routine medical procedures is notoriously high. Without enough coverage, you could face a serious financial hit even for something as routine as a broken leg or the removal of your appendix.
Then there’s the matter of cost. Health insurance plans with lower premiums can save you money but might come with a big deductible that you must first spend before your insurance coverage kicks in. Plans with higher premiums might come with a lower deductible but also might put a strain on your bank account.
So, yes, turning 26 brings with it plenty of health insurance questions. Fortunately, we can help as you hunt for the right health insurance policy. Read on for our tips on the health insurance coverage you need in your 20s.
Why do I Need Health Insurance?
You might think that you are young and healthy enough to not have to worry about health insurance. But you’d be wrong. You never know when the unexpected might happen. And it’s partly to cover the costs of unexpected emergencies – you fall while playing basketball and break your leg or you tumble off your bike and shatter your ankle – that you need health insurance.
Then there’s the cost of routine care. Even regular visits to the doctor for check-ups and vaccines can be expensive without health insurance. The cost of prescription drugs, too, can bust your budget if you don’t have health insurance to lessen the financial blow.
The 2023 Millman Medical Index predicted that the average annual cost of healthcare for U.S. adults would have risen to $7,221 last year. HealthCare.gov says that a broken leg can cost $7,500 to treat. Three days in the hospital can cost $30,000.
You might not need to spend as much on healthcare if you are in your 20s and healthy. But healthcare costs can be high at any age, which is why you need the protection of health insurance at every age.
How Much Health Insurance do I Need in my 20s?
How much health insurance you need in your 20s and what plan you should choose depends on a host of factors such as your health status, lifestyle, financial situation, and risk tolerance, the most important of which are your monthly income, whether you are married, whether you have children and whether your employer provides health insurance as a benefit. Consider the different types of insurance plans before you make a decision. Here are some considerations to help you determine how much coverage you may need:
Basic Coverage. At a minimum, you'll want coverage for your health care needs including routine check-ups, preventive care, and unforeseen medical emergencies. This ensures you're protected against unexpected medical bills that could arise.
Emergency Coverage. Consider the potential costs associated with accidents or sudden illnesses. A comprehensive medical insurance plan should provide coverage for emergency room visits, hospital stays, surgeries, and ambulance services.
Preventive Care. Many health insurance plans cover preventive services such as vaccinations, screenings, and wellness visits at no additional cost. Investing in preventive care can help you maintain good health and catch any potential issues early on.
Prescription Drugs. If you require prescription medications, make sure your health insurance plan includes coverage for prescriptions. Pay attention to copayments, deductibles, and coverage limits for medications.
Mental Health Coverage. Mental health is an important aspect of overall well-being. Look for a health insurance plan that offers coverage for mental health services, including therapy and counseling sessions.
Vision and Dental Coverage. While these may not be included in all health insurance plans, it's worth considering coverage for vision and dental care, especially if you have specific needs or anticipate regular visits to the dentist or optometrist.
Coverage Limits and Deductibles. Evaluate the coverage limits, deductibles, and out-of-pocket expenses associated with different health insurance plans. Choose a plan with limits and deductibles that you can comfortably afford.
Employer-Sponsored Coverage vs. Individual Plans. If you're employed, you may have the option to enroll in a health insurance plan through your employer. Compare the health insurance options and costs of employer-sponsored plans with individual plans to determine the best health insurance option for you.
Life Changes and Future Needs. Keep in mind that your health insurance needs may change over time, especially as you experience significant life events such as getting married, starting a family, or changing careers. Choose a plan that offers flexibility and can adapt to your evolving needs.
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Where to find health insurance
You can buy health insurance from three main sources in your 20s: from your employer if you work for a company that provides health insurance, from the federal government’s Health Insurance Marketplace that was launched as part of the Affordable Care Act (ACA) or from the private marketplace, shopping around with individual insurance agencies to find the right health insurance policy for you.
Employer-sponsored health insurance
If your employer offers health insurance, you might be able to choose from a variety of different plans. An HMO is the most restrictive, limiting you to doctors and care providers in your health insurance plan’s network. Because they are more restrictive, HMOs tend to come with lower monthly health insurance premiums. If you are in your 20s and single and you’re not overly attached to a specific doctor, an HMO might be a good choice if your annual income is lower and saving money is a priority.
You might also be able to choose a PPO plan. Under these plans, you can seek medical care from any provider. You are not limited to doctors or caregivers in a certain network. PPO plans, though, might come with higher monthly premiums. If you are in your 20s and married with children, you might choose a PPO plan because of the flexibility it provides when you are seeking medical care.
Many employers also offer high-deductible health plans. These policies, as their name suggests, come with a high deductible. Your deductible is the amount you must pay each year out of pocket before your health insurance coverage kicks in. If you have a deductible of $5,000, you’d have to pay for your first $5,000 worth of healthcare costs out of pocket each year before your policy begins paying out for your care.
The benefit of these plans? Your monthly premiums will be smaller. Just make sure that you can afford those out-of-pocket costs until you hit your deductible.
The average annual premium cost for employer-sponsored health insurance in 2023 came in at $8,435 for individuals and $23,968 for family coverage, according to KFF. There is little indication that health insurance costs are heading down, either. KFF reported that both individual and family coverage premiums rose 7% in 2023 when compared to 2022.
Health Insurance Marketplace
But what if your employer doesn’t provide health insurance? Then you can shop for a plan that fits your budget on the Health Insurance Marketplace, which you can find at HealthCare.gov.
The marketplace offers plans in three main categories: Bronze, Silver and Gold. All plans cover the same set of essential health benefits, according to HealthCare.gov. You'll just pay lower monthly premiums for some plans along with higher deductibles. The average monthly premium for a marketplace health insurance plan came in at $477 in 2024, according to KFF.
The 10 health benefits covered by marketplace plans are:
- Ambulatory patient services
- Emergency services
- Hospitalizations
- Pregnancy, maternity and newborn care
- Mental health and substance-use disorder services
- Prescription drugs
- Rehabilitative services and devices
- Laboratory services
- Preventive and wellness services
- Pediatric services
Plans must also include:
- Birth-control coverages
- Breastfeeding coverage
Depending on your zip code, Bronze plans come with monthly premiums as low as $278, while Silver plans come with monthly premiums starting at $362. You can get a Gold plan for monthly premiums starting at $415, according to HealthCare.gov.
You will, though, have a higher deductible – the out-of-pocket costs you must first pay – with lower-priced plans.
If you are under 30, you can also choose from a catastrophic plan from the Health Insurance Marketplace. These plans come with the lowest monthly premiums, so they are affordable for 20-somethings who don't earn much money. They do, though, come with the highest deductibles of any marketplace plans. Be sure that you can afford to cover the out-of-pocket healthcare costs you might face with such a plan.
Pay-out percentages. It's important to consider what percentage of your care your health insurance plan will pay out. Plans on the marketplace cover between 60% and 90% of your covered healthcare services after you meet your deductible. Say you've already covered your $1,000 deductible and you need care for a broken leg that costs $3,000. If your plan covers 80% of medical costs, you'd pay $600 and your insurance would cover the remaining $2,400.
Out-of-pocket maximums. Plans also come with differing out-of-pocket maximums, the total amount you're required to pay each year no matter how much covered care you get. Say your plan comes with a $3,000 out-of-pocket maximum. Once you pay a total of $3,000 in deductible payments, coinsurance and copayments, your plan will pay for the rest of your covered medical costs for the rest of the year.
Premium tax credit. Depending on your income, you might be eligible for a premium tax credit, a credit that you can use each month to lower your health insurance policy's monthly premium. For instance, when I told the Health Insurance Marketplace that I was a 27-year-old male living in Cook County, Illinois, with an annual income of $35,000, the marketplace said that I might qualify for a premium tax credit of $222 a month.
If my health insurance policy came with a $350 monthly premium, then, my premium tax credit would lower it to $128 a month.
Open enrollment. Make sure that you don't miss the enrollment period for marketplace insurance coverage. Exact open enrollment dates might change each year, but in general the enrollment period starts in early November and ends in mid-January.
Medicaid. Depending on your income, you might qualify for free or low-cost health coverage from Medicaid. This service isn't open to everyone and will vary according to your state. Want to see if you are eligible for health insurance through Medicaid? Visit this page at HealthCare.gov and click the "Find out now" button.
Shop the private market. If your employer doesn’t provide health insurance, you aren’t limited to shopping the online marketplace. You can also shop for the right policy directly from insurance providers themselves.
Be sure, though, to ask the right questions. Ask insurance providers how much your premium will cost each month, what medical treatments and services are covered, the size of a policy’s deductible and policies’ pay-out percentages. Ask, too, if a plan you are choosing comes with an out-of-pocket maximum.
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How to find the right health insurance plan?
How do you choose the right plan for you? Again, you’ll need to consider your own financial situation and what coverage your employer offers.
If you aren’t making much money, it might make sense to explore a Bronze level or catastrophic plan from the marketplace. But if you have started a family and you’ve built some savings, you might want to invest more each month for, perhaps, a Silver plan that comes with a slightly higher monthly premium but a lower deductible.
If you have family members to cover, you might consider a PPO plan that allows you more flexibility when choosing doctors.
And if your employer offers health insurance, you might consider exploring their offerings. Many offer a range of plans, including high-deductible health plans, PPOs or HMOs.
Three plans that might work for 20-somethings
Choosing the right health insurance plan when you’re in your 20s might seem overwhelming. But you do have plenty of choices, even if your employer doesn’t provide health insurance.
For instance, as of mid-February on the Health Insurance Marketplace, you could have chosen from:
- The Blue FocusCare Bronze 209 plan with a monthly premium of $277.74. Your deductible, though, would be a high $7,400 a year. You would also face copayments, the amount you must always pay for certain medical procedures even after you meet your deductible. For this plan, for instance, you have a copayment of $65 for every visit to your primary care doctor and $105 for every visit to an urgent care facility.
- If you instead chose the Elite Gold plan, you'd pay a premium of $551.28 a month, but you would have a $0 deductible, meaning that your insurance policy would cover most of your healthcare costs from day one. You'd have a co-pay of just $5 for every primary care visit and $35 for every visit to an urgent care facility.
- If you wanted a plan with both a lower deductible and monthly payment? You could choose the Blue FocusCare Silver 210 plan. Its monthly premium is $362.23 and it comes with an annual deductible of $2,500. Copayments are $25 for every visit to your primary care physician and $50 for every visit to an urgent care facility.
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- Get covered in 5 minutes.
- 95% of customers approved.
- No Hassles. No Gimmicks. Easy Application.
- Non-Commissioned Agents.
- Ages 20+
- 100% Online Application.
- Fast Coverage.
The Bottom Line
When signing up for health insurance coverage and determining the type of plan that you need, it’s important to consider several factors, including any health conditions that you might have and the average premium that you can afford. Make sure, too, to look carefully at the average cost of any insurance policy you are considering. A policy might have a lower premium but might come with a higher deductible or might not cover all the medical services you need.
If you are in your 20s, you might not think that you’ll need enough medical care to justify the average premiums that come with health insurance. But remember, medical emergencies can happen and they’re almost always expensive. You might also need preventive care that results in health benefits over the long run. The average cost of a health insurance policy, especially for people in their 20s, is rarely higher than what you might be forced to pay for medical care.
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Writer
Dan Rafter is a freelance writer who has more than 20 years experience covering personal finance. He's written for the Chicago Tribune, Washington Post, Bankrate, CreditCards.com, Rocket Mortgage, NortonLifeLock and several others.
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