Are you a young adult currently covered by a parent’s health insurance? If so, you may be concerned about what happens to that coverage when you finish your studies or move out of the parental home.
The good news is that young adults under 26 can remain covered by their parent’s health insurance plan.
But do you have to be a full-time student to stay on your parents’ health insurance? And are there any other terms and conditions to be aware of?
These are questions that many young adults have. We answer these questions and many more related to dependent coverage in the article below.
Understanding Your Parent’s Insurance Coverage
The Affordable Care Act (ACA), a set of health reform laws signed into law by President Obama in 2010, changed how health care and health insurance operate in the US. Health insurance plans initiated before this were termed ‘grandfathered plans’.
In 2010, the provision to allow young adults to remain on a parent’s plan took effect. Grandfathered group plans could refuse to do this if the young adult had access to other coverage, such as employer coverage. That fell away in 2014.
The ACA doesn’t require employers’ small-group health plans to offer dependent coverage, but most do. The ACA’s employer mandate stipulates that large group plans must offer full-time employees and dependents coverage.
Who Qualifies For Dependent Coverage?
Dependent coverage is determined by age and not other factors.
Health insurance plans with dependent coverage must allow adult children to remain on the parent’s plan until age 26. It applies to all children under 26, even if they don’t live with their parents. Whether or not you are a student or financially dependent on your parents is immaterial.
Your coverage will continue if you get married or have a child during this time. However, your coverage does not extend to a spouse or child. You will have to secure other health insurance coverage for them. CHIP or Medicaid are good options if you have a low income.
Staying On Your Parent’s Insurance Past The Age Of 26
If you’re under 26 and single, you may prefer to stay on a parent’s health plan for as long as possible. That’s understandable if you’re a student with no income, have finished your studies, and are still looking for work.
While the ACA sets a nationwide standard for the age limit, some states have implemented laws that sometimes extend coverage to age 30 or 31. Special eligibility conditions typically apply.
The states that allow this are:
- New Jersey
- New York
- South Dakota
However, depending on the state, you may have to meet certain criteria. Examples include being unmarried and living in the same state.
Several states allow you to remain on your parent’s insurance plan past 26 due to a pre-existing disability. Once again, various other criteria may apply. If you are uncertain about your state’s stance on this, enquire through your state’s health insurance exchange.
Insurance And Student Status
Student health insurance may be your best option if you are a full-time student.
Some universities and colleges offer student health insurance coverage. They’re usually ACA-compliant but are often more affordable than private health insurance.
You may be allowed to add the cost of the premiums into your tuition and fees costs. This means you won’t have to worry about paying monthly premiums. But you might pay interest on those premiums if you add them to your student loan.
Part-Time Students: Navigating Your Insurance Coverage Choices
Part-time students are sometimes eligible for student health insurance, too. It depends on the institution you are studying with. And even if you are working part-time, you might have no insurance benefits at work, either. Employers are only required to offer insurance to full-time employees.
If you work and study part-time, staying on your parent’s health plan may be best. Alternatively, look for a plan of your own that you can afford.
When You Lose Health Insurance Through Your Parents
Does your coverage stop the moment you turn 26? Not necessarily, no.
Some health insurance plans cease to cover you the month you turn 26. On others, you stay insured until the end of the plan year (usually the end of the calendar year) when you turn 26. If your parents obtained their insurance through HealthCare.gov, your coverage lasts until the end of the year you turn 26.
Are you about to lose coverage on a parent’s plan when you turn 26? Open Enrollment for ACA plans runs from November 1 to January 15 in most states. Losing coverage on your parent’s plan is a qualifying event for special enrollment, regardless of the time of year.
The special enrollment period applies to individual health insurance and group insurance through an employer. You have 60 days before and after that date to enroll in a new individual plan. If you want to enroll in your employer’s group plan, you will have 30 days.
Exploring Your Alternative Insurance Options
When you lose health insurance coverage on a parent’s plan, it’s time to explore alternative insurance options.
The ACA Marketplace offers different types of health insurance plans across four tiers – bronze, silver, gold, and platinum. Bronze and silver plans typically have lower premiums. Gold and platinum plans generally offer more benefits.
Low income does not have to be a barrier. ACA subsidies are available. If your parents don’t claim you as a dependent on their tax return, you can apply for ACA health insurance with a subsidy.
Your income will determine your eligibility for a subsidy. If your parents do claim you as a dependent, a subsidy may still be an option. However, the household’s net income will then determine eligibility.
Other Insurance Coverage Options
Student Health Insurance Plan
Student health insurance can be a solution for students living on modest means. See the section above under ‘Insurance and student status.’
Employer’s Health Plan
When you apply for a job, ask about any health insurance benefits. As a full-time employee, you are entitled to receive health benefits. Large-group plans include benefits for your dependents, too.
Spouse’s Health Plan
A spouse’s health plan may offer you coverage as a dependent. Before you leap, ensure that you will be getting better coverage than you currently have on your parent’s plan.
Investigate Medicaid Coverage
You may be eligible for Medicaid if you have little to no income. You can apply for Medicaid with your state’s Medicaid agency or through the Health Insurance Marketplace. Your income will determine your eligibility.
Catastrophic Health Insurance
Look into a Catastrophic Health Insurance Plan if you are a young adult under 30 on a tight budget. It covers essential screening services and emergency care and has a low monthly premium. However, it has a high deductible, so it only suits individuals in good health.
A short-term health plan may be the solution if you need temporary medical coverage while looking for a health insurance plan or are waiting for the ACA’s Open Enrollment Period to start. It offers catastrophic plan coverage and is generally affordable.
When Is It Not Ideal To Stay On A Parent’s Plan?
You can remain dependent on a parent’s health plan until age 26. It can help if you are still studying and unable to afford insurance. But it’s not always a good idea. Here are some examples that explain why.
You Live Outside Of The Plan’s Provider Network Area
If you have moved out and have your own place, you can stay on a parent’s plan until age 26. But if that plan had an exclusive or preferred network of providers, this may pose a problem. You might not live near these providers and therefore have to travel whenever you need to see a doctor.
There are different types of health insurance to choose from. If you are okay with being restricted to a smaller network of providers, an Exclusive Provider Organization plan (EPO) is usually the cheapest.
Dependent Coverage Is Not Included In Employer’s Insurance
If one of your parents has good employer-sponsored health insurance that includes dependent coverage, it makes sense for you to stay on it. However, some employers only contribute to their employees’ coverage, not their dependents. That means your parents would have to pay extra for your coverage.
While your parents might not mind your premiums being payroll deducted, it can financially strain households with several children. In such a case, you may prefer to opt out of the dependent coverage and get your own. If you’re in college, student health insurance may be the solution.
You Get Married Or Have A Child
If you get married or have a child, your spouse and/or child won’t enjoy the coverage you do. You may wish to enroll in your own health insurance plan in such a situation. Marriage or the birth of a child qualifies you to disenroll from your parent’s health plan and enroll in a new one with your dependents.
If you have little or no income and want to stay on your parent’s plan, Medicaid or CHIP may suit your spouse or baby. Alternatively, apply for an ACA plan that covers you and your dependents. There are ACA subsidies available if you have little income.
Despite maternity coverage now being included on all ACA plans, it’s not required for dependents on large group plans. So if you’re pregnant and your parent’s plan doesn’t cover your maternity healthcare needs, you’ll need a plan of your own.
Your Employer Offers Better Benefits
As a young adult, you may already be employed. Take a look at the health insurance benefits that your employer is offering. They may be better than your current benefits on a parent’s health plan. So, how can you know if this is true for you?
Be realistic about your health care needs. Chances are you have different health needs than your parents. Your employer’s health insurance plan may be better suited to your needs. When ACA Open Enrollment starts, you can switch from dependence on your parent’s insurance to your own health plan.
To stay on your parent’s insurance, do you have to be a full-time student? No. If their health plan offers dependent coverage, you have the peace of mind that comes with health insurance coverage until you turn 26. This is guaranteed regardless of your circumstances.
If you get married or have children before that, you will retain your coverage, but your spouse and/or children won’t be covered. And when you turn 26, you won’t be, either. What happens then? You get yourself and anyone depending on you affordable ACA-compliant health insurance coverage.