Insuring Your Kids: What You Need To Know

Whether you're looking at car insurance or health insurance, the answer is yes—you do have to carry your kids on your insurance. However, there are different rules for how long you have to carry them for each type of insurance, and there are also different rules for each state.

Pros and cons of adding your child to your insurance

Adding your child to your insurance policy is a legal obligation if they live with you and will be driving your car. While this is the cheapest option, it has its pros and cons.

Pros

Adding your child to your insurance policy is cheaper than standalone coverage. Some insurers may not even offer coverage to young drivers, so adding them to your policy may be the only choice. It is also more convenient than having them take out their own policy.

Most insurers offer multiple discounts that can help decrease the cost of insuring a teen driver. For example, your insurer might offer a discount if your student maintains a good GPA or completes a driver’s education program.

Cons

Adding your child to your insurance policy can increase your insurance premiums exponentially. If your teen cannot cover the costs, you will have to pay for them yourself.

If your child causes an accident while driving, you could be held liable, and your insurance rates will likely increase.

When to get your own insurance

In the United States, most children can remain on their parents' health insurance plans until they turn 26. However, this is dependent on the insurance plan, as some plans may not cover dependent children.

There are also certain circumstances where this age limit can be extended, depending on the state. For example, children with disabilities can remain on their parents' insurance indefinitely in some states. In other states, this deadline can be extended until the age of 30, depending on the child's marital status, veteran status, disability status, or whether they have children.

Once you exceed the age limit for remaining on a parent's health insurance plan, you will need to explore other options for health and supplemental insurance. Here are some options for when to get your own insurance:

Employer-Sponsored Health Insurance

If you are employed, your employer may offer health insurance options with decent premium payments depending on your coverage goals. However, this insurance is usually tied to your job, and you may lose it if you switch jobs.

School-Sponsored Health Insurance

If you are a student, your educational institution may offer school-sponsored health insurance with low copays. This varies from school to school, so it is recommended to consult an advisor on campus.

The Health Insurance Marketplace

If you cannot get coverage through your employer or school, you can apply for insurance coverage through the Health Insurance Marketplace. This offers a range of plans and potential subsidies based on your income level. You can also take advantage of special enrollment opportunities outside of the standard Open Enrollment period if you experience life changes such as moving, losing other coverage, or family events.

Medicaid

Medicaid is a type of health insurance offered by federal and state governments to help low-income adults, families, people with disabilities, elderly adults, children, and pregnant women. Eligibility is based on income, family situation, and other factors.

Catastrophic Health Plan

If you are under 30, you may be eligible for a "Catastrophic" health plan, which is a way to protect yourself primarily from worst-case scenarios. However, if someone claims you as a tax dependent, you will not qualify for savings based on your income.

How to get added to a parent's insurance plan

Adding your parents to your insurance plan can be complicated, as there is no mandate requiring health plans to offer coverage for parents on their children's insurance. However, there are some instances where you can include your parents as dependents. Here is a guide on how to get added to your parents' insurance plan:

Eligibility

Firstly, you need to determine if you are eligible to be added to your parents' insurance plan. The criteria for adding dependents vary depending on the insurance provider and the type of policy. Some common requirements include:

• Age: Most insurance plans allow children to be covered until they turn 26. After that, you may need to purchase your own insurance plan.
• Relationship: To qualify as a dependent, you must be the biological child, stepchild, adopted child, or foster child of the insured parent.
• Length of Residency: Some insurance plans require that you have lived with your parents for at least six months to be considered a dependent.
• Income Contribution: While you can be your parent's tax dependent and work, your income must be less than half of your support expenses.
• Tax Filing: You cannot be claimed as a dependent if you file a joint tax return.
• Other Claims: You cannot be claimed as a dependent by more than one household.

Types of Insurance Plans

The process of adding a dependent also differs based on the type of insurance plan your parents have.

Job-Based Plans

If your parents have a job-based insurance plan, they can typically add you during the plan's yearly Open Enrollment Period. This period usually runs from November through the end of the calendar year, with coverage starting in the new year. In some cases, you may also be able to join during a Special Enrollment Period if certain life events occur, such as losing health coverage or moving.

Plans Bought Through the Health Insurance Marketplace

For Marketplace plans, your parents can include you on their application when they apply for a new plan. If they already have a plan, they can only add you during the yearly Open Enrollment Period or a Special Enrollment Period. You can remain on your parent's Marketplace plan until the end of the year you turn 26 or the age permitted in your state.

When to Add Parents to the Plan

The timing of adding your parents to your insurance plan will depend on your personal circumstances. It could be due to sudden life changes, such as a loss of coverage or a diagnosis, or it could be a decision made after estate planning discussions.

Consulting a Professional

If you are unsure about your eligibility or the process of adding your parents to your insurance plan, it is advisable to consult a tax or insurance professional. They can guide you through the specific requirements and help you navigate the complex world of insurance plans.

Insurance options after turning 26

In most states in the U.S., individuals can stay on their parent's health insurance plan until they turn 26 years old. However, once they reach this age, they will need to find their own insurance coverage. Here are some options for insurance after turning 26:

Employer-Sponsored Health Insurance

If you have a full-time job, your employer may offer health insurance benefits. Turning 26 is considered a "qualifying life event", which means you are eligible for a special enrollment period outside of the standard open enrollment. You will only have 60 days to enroll, so it is important to plan ahead. Contact your company's human resources department to understand your options and next steps.

School-Sponsored Health Insurance

If you are a student, your educational institution may offer school-sponsored health insurance with low copays. This option is worth exploring, but it is important to note that not all schools provide this benefit.

Health Insurance Marketplace

If you are unable to get coverage through your employer or school, you can apply for insurance through the Health Insurance Marketplace. This is a marketplace where you can apply for the insurance coverage that best meets your needs based on your state's individual marketplace.

Medicaid

Medicaid is a type of health insurance offered by the federal and state governments to help low-income adults, families, people with disabilities, elderly adults, children, and pregnant women. Eligibility for Medicaid is based on income, and you must typically be a resident of the state that you are applying in.

Consolidated Omnibus Budget Reconciliation Act (COBRA)

If you lose your job, you can continue your existing coverage for a limited amount of time through the COBRA program.

It is important to note that the options and availability of insurance plans may vary depending on your state and individual circumstances. It is always a good idea to consult with an insurance professional or agent to understand your specific options and make an informed decision.

Discounts and ways to get cheaper insurance

There are several ways to get cheaper insurance, including discounts. Here are some tips to help you save money:

• Shop around for the best rate: Don't assume that any one company is the cheapest. Compare car insurance rates from different insurers, including local and regional insurers.
• Ask about discounts: Insurers typically offer various discounts. For example, you may be able to get a discount if you bundle your car insurance with other policies, such as homeowners insurance, or if you insure multiple cars with one policy.
• Work on your credit: In most states, your insurance credit score is a significant factor in determining your car insurance rate. Improving your credit score can help you get lower insurance rates.
• Skip comprehensive and collision coverage for older cars: If you have an older car, you may not need comprehensive and collision coverage, which pays to repair damage to your vehicle from accidents or other causes. Instead, consider increasing your deductible, which will lower your premium.
• Take advantage of multi-car discounts: Insuring multiple vehicles and drivers on the same policy can often result in a discount.
• Be a safe driver: Maintaining a safe driving record is key to getting lower car insurance rates. Avoid accidents and moving violations, which can increase your insurance premiums.
• Take a defensive driving course: Some insurance companies offer discounts to drivers who complete an approved defensive driving course. This can also help reduce the number of points on your license.
• Increase your deductible: Choosing a higher deductible when you select your car insurance can lower your premium. Just make sure you can afford to pay the higher amount if you need to file a claim.
• Consider usage-based or pay-per-mile insurance: If you don't drive much or consider yourself a safe driver, you may qualify for a discount with a usage-based insurance program or pay-per-mile insurance.
• Review your coverage: Go over your insurance policy and consider removing any coverage you may not need, such as roadside assistance or car rental coverage.
• Install anti-theft devices: Installing anti-theft devices, such as car alarms or LoJacks, may help reduce your premiums.
• Speak to your agent: Ask your insurance agent about any other cost-saving options or special discounts you may be eligible for, such as military personnel discounts or employee discounts.

Frequently asked questions