Just days after its public release, Trumpcare is already facing significant opposition from Republican senators, throwing its future into doubt. The American Health Care Act (AHCA) provides some insights into the direction Republicans may take next. Here’s what millennials should be aware of:
Positive News for Millennials
Staying on Parents’ Insurance
The AHCA retains the provision from Obamacare that allows individuals in their twenties to remain on their parents’ insurance policies until the age of 26.
Potential Premium Reductions
While the AHCA may reduce premiums for young adults, older Americans may bear the burden. The latest bill expands the insurance age band, enabling insurers to charge older Americans up to five times more for their insurance. This could result in a 15% decrease in premiums for individuals aged 20-29, according to a study by the AARP Policy Institute. However, those aged 60 and older could face a 22% increase in their premiums.
Tax Credits and Wealthier Millennials
Under the AHCA, wealthier millennials may benefit from changes in tax credits. Instead of income-based criteria, the new system primarily considers age. For example, a 27-year-old with an annual income of $20,000 would now receive the same $2,000 tax credit as a 27-year-old earning $75,000. In contrast, under Obamacare, a $20,000 income would have entitled individuals to an average tax credit of $3,225, diminishing at an income level of $48,000.
The AHCA presents a mixed bag of consequences for millennials. While certain provisions offer advantages such as extended coverage under parents’ policies and potential premium reductions, other aspects, like the age-based tax credit system and increased premiums for older Americans, may create challenges. As the bill’s future remains uncertain, it is essential for millennials to stay informed and understand how it could impact their healthcare and finances.
The Complications of the AHCA
While the healthcare landscape is often portrayed as a black and white issue, the reality is much more complex. The American Health Care Act (AHCA) introduces a new provision known as the “continuous health insurance coverage incentive,” which aims to encourage individuals to maintain insurance coverage. However, the implementation of this provision raises new concerns.
The Continuous Coverage Penalty
Under the AHCA, insurance companies would be allowed to charge individuals who have experienced a gap in insurance coverage for more than 63 days up to 30% more for their first year of coverage. This mirrors the intention of Obamacare’s individual mandate, which aimed to ensure that individuals stay continually insured. However, there is a significant difference in how the penalties are allocated. While Obamacare’s penalties were directed to the government, the new provision allows insurance companies to collect and retain the fees.
The Impact on Millennials
It is crucial to consider how this provision specifically affects millennials. Unfortunately, the news is not favorable for this age group. As an example, let’s take a look at the continuous coverage penalty for a mid-level insurance plan:
- For an average 27-year-old, the penalty would amount to $1064, compared to Obamacare’s penalty of $695.
One of the main reasons why millennials are more likely to face a lapse in insurance coverage is their unique life circumstances. A study published in the journal Health Affairs in 2013 revealed that nearly half of individuals losing health insurance within a 24-month period were between the ages of 19 and 34. This is particularly alarming considering that this age group represents only about one-third of the under-65 adult population.
Sarah Schultz, the communications director for Young Invincibles, a millennial advocacy and policy non-profit, aptly refers to this provision as the “Millennial Penalty.”
As we navigate the intricacies of healthcare reform, it is essential to carefully evaluate the impact it has on different demographics, particularly millennials. By understanding the complexities and potential consequences, we can work towards creating a more inclusive and equitable healthcare system.