7 Tips for Young Adults Buying Health Insurance for the First Time

You may be young and fit, but you're not invincible. Although young adults may feel like health insurance isn't important, all it takes is one serious medical incident to throw you into a deep hole of medical debt. Protect yourself and your future by buying health insurance.

You May Not Need to Buy It

• Previously, young adults lost dependent status and health coverage under their parents' health insurance plan when they turned 19, unless they were students. In the case of students, depending on the circumstances, they could remain insured until age 23 or 25. As of 2010 under U.S. health care reform, anyone under the age of 26 -- student or not -- can continue to be covered by their parents' insurance plan.

Know the Differences

• Health insurance plans traditionally come in several "flavors." Preferred provider organization plans, or PPOs, let you choose from a selected group of doctors or hospitals. Meanwhile, health maintenance organization plans, or HMOs, require you to choose a primary care physician from a limited selection, and generally don't cover treatment provided by medical providers not approved by the plan. Finally, a point of service plan, or a POS, combines the HMO and PPO models. For example, like an HMO, all your fees are covered if you stay in network, but like a PPO, you're allowed to go out of network depending on the circumstance. This type of plan has many more variables and may differ depending on the specific provider.

Opt for Flex Spending

• Some health insurance plans include the option for flexible spending accounts. This works by letting you take some of your salary before taxes and use it toward medical expenses. This can save you significantly by reducing your taxes on money that you would have spent anyway on deductibles and co-pays, for instance. "Young Money" magazine recommends this for young adults.

Ask About Maximum Caps

• Verify with the health insurance provider what the maximum out-of-pocket expenses are under your plan. Ideally, this number should be low to limit how much money you'll have to pay if you're ever hospitalized or become seriously sick. If it doesn't have a cap, you may find yourself paying exorbitant fees once your health insurance coverage maxes out.

Check for Medicaid

• If you're unemployed or are employed in a very low-paying job, you might be able to apply for Medicaid. This state- and federal-funded insurance program helps to subsidize the cost of health insurance. Because every state has different rules, check for your eligibility by consulting the Centers for Medicare and Medicaid Services.

Join a High-Risk Pool

• If you're sick with a pre-existing condition, many traditional health insurance plans won't let you apply for coverage. In such cases, you may be able to apply for Medicaid or join a state-based high-risk insurance pool. However, starting in September 2010, new laws were to be slowly phased in requiring health insurance plan providers to accept people with pre-existing conditions.

Get Affordable Care

• While you're searching for health insurance, you may become ill or need medical treatment that would be costly without health insurance. If this happens, many university medical centers and community health clinics provide low- or no-cost health care for the uninsured or underinsured. Additionally, if you're an American Indian or Alaskan native, you may be able to get free health care services via the federal Indian Health Service.

Choose a Higher Deductible

• "Young Money" magazine recommends electing to pay a higher deductible, suggesting a minimum of $500. The higher your deductible, generally the lower your premium. This can work especially for young, healthy adults, helping them to save money by reducing their monthly health-care costs but protecting financially against a catastrophic illness or accident.