Why Younger Millennials Are Refusing Employer Health Insurance

The Millennial Generation – which includes those born between the early 1980s and about the year 2000 – has hit the workforce across the nation, and these individuals are seeking employment with very specific perks. Ironically, reports reveal that for younger millennials who are ages 18-26, employer-provided health insurance is not one of the most-requested benefits.

This reality flies in the face of what many have assumed about the Affordable Care Act (ACA). After all, aren’t younger people working across the United States supposed to opt into ACA? In fact, they are getting an advantage, but it isn’t through their companies. It’s more likely to be through their parents.

Here’s why younger millennials are refusing employer health insurance plans:

Affordable Healthcare Options for Younger Working Adults

Under the ACA guidelines, adults who are ages 26 and younger can get healthcare coverage under their parents’ healthcare plans. In many cases, this is a cheaper alternative than getting insurance through businesses, which may require that workers pay a premium each month to help offset the cost of the plan.

Because first-time employees’ wages are typically limited by their lack of experience, this means they have to pay a smaller percentage of each paycheck on healthcare insurance. In other words, more money can be spent in other areas, such as building a nest egg or paying off college loans.

Without a doubt, for moms and dads with close relationships to their millennial-age children, the decision to keep offspring on their plans allows the young adults to save more income as they begin their careers.

Although parents might have to pay a little more for their children to be on their insurance plans, it’s a smaller amount than the children would pay in deductibles through their employers, which averaged just under $5,000 per year in 2014, if they were forced to get healthcare on their own.

Numerous businesses, especially those that are considered small businesses, only pay for 50 percent of employees’ premiums; thus, the price tag for employer-offered insurance can be daunting for those making relatively low wages.

Other Considerations for Millennials to Refuse Employer-Provided Health Insurance

Beyond remaining on their parents’ healthcare plans, there are a few other considerations that lead millennials to decline health insurance from their companies.

First is that the insurance coverage might not be what they desire or need. They may have shopped on the ACA exchanges and discovered that for their age group, they could get a much lower rate by accepting a plan that was more suited to their current medical needs.

In other cases, millennials may decide to simply shop around for alternative means to get healthcare plans, especially if employers offer added income if an employee doesn’t accept healthcare insurance through the business. This added income could be much more attractive to a worker who is just starting out than the promise of a healthcare plan that’s more suited to an older employee.

Although longer-than-desired waiting periods to be insured through an employer could play a part in millennials’ decisions not to accept healthcare insurance offered by their employers, this may not play a huge role. Under the guidelines issued by the ACA, businesses have to offer insurance to new workers within three months of their start dates of employment. Still, this waiting period, albeit a modest one, could sway some workers’ decisions who are worried about going even a short time without healthcare insurance.

What Happens after Millennials Turn 26

As Millennials begin to age out of opportunities to remain on their parents’ healthcare plans, they start to embrace the idea of being on their employers’ plans instead. Consequently, older millennials are much more likely to sign up with their businesses’ healthcare plans.

It’s a fascinating look at the behavior patterns of a very specific segment of the workforce, and one that employers no doubt need to focus on to make sure they provide what’s needed for their personnel.

This article by Anum Yoon first appeared on Current On Currency and was distributed by the Personal Finance Syndication Network.