Jeffrey Wade
The Affordable Care Act (ACA) has made it mandatory for health insurance providers to offer dependent child coverage until the child reaches the age of 26. This applies to all plans in the individual market and to all employer plans. However, once a child turns 26, they are considered an adult by the health insurance system and are, therefore, expected to carry their own health insurance plan. The duration of coverage after the child turns 26 depends on the type of insurance coverage their parents have.
| Characteristics | Values |
|---|---|
| Maximum age for a minor to be covered by their parent's insurance | 26 years |
| Coverage end date for parent's marketplace plan | December 31 of the year the minor turns 26 |
| Coverage end date for parent's employer plan | End of the month the minor turns 26 |
| States where coverage can continue past 26 | Florida, Illinois, Nebraska, New Jersey, New York, Pennsylvania, South Dakota, and Wisconsin |
| Options after aging out of parent's coverage | Employer-sponsored plan, individual plan, student health plan, Medicaid, COBRA |
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What You'll Learn
Coverage under a parent's plan
In the United States, the Affordable Care Act (ACA) requires plans and issuers that offer dependent child coverage to make the coverage available until the child reaches the age of 26. This applies to all plans in the individual market and to all employer plans. Before the ACA, many health plans and issuers could remove adult children from their parents' coverage because of their age, regardless of their student status or place of residence.
If you are covered under your parent's employer plan, your coverage usually ends when you turn 26. However, this differs depending on the state and the type of insurance coverage your parents have. In eight US states (Florida, Illinois, Nebraska, New Jersey, New York, Pennsylvania, South Dakota, and Wisconsin), you can stay on your parent's health insurance plan past the age of 26.
If you are covered under a plan your parents purchased in the Healthcare.gov marketplace, you will have access to that plan until December 31 of the year you turn 26. This gives you time to research available health insurance options and sign up for a new health plan during open enrollment.
If your parents' plan is sponsored by an employer with 20 or more employees, you may be eligible to purchase temporary extended health coverage for up to 36 months under the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA insurance is usually very expensive because you have to pay the full cost of the insurance plan.
If you are physically dependent on your parents at 26 due to a disability, you might qualify for Medicare. If your state has expanded Medicare, you could also qualify if your annual income is up to 138% of the federal poverty level.
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Options after aging out
Once you turn 26 and age out of your parents' health insurance plan, you have several options to choose from to ensure you continue to have health insurance coverage. Here are some options to consider:
- Job-based health insurance plans: If you are employed, you can enroll in your employer-sponsored health insurance plan. Typically, you can enroll in this type of plan outside of the yearly Open Enrollment Period if you qualify for a Special Enrollment Period. To qualify for a Special Enrollment Period, you must have experienced certain life events, such as losing your previous health coverage, moving, getting married, having a baby, or adopting a child. Contact your employer's human resources department to understand their specific rules and deadlines for enrollment.
- Marketplace health insurance plans: If you do not have access to an employer-sponsored health plan, you can purchase a plan through the Health Insurance Marketplace during its open enrollment period, which is typically from November 1 to January 15. You may also qualify for a Special Enrollment Period if you have recently lost your parents' coverage due to aging out. The Special Enrollment Period typically starts 60 days before you lose coverage and ends 60 days after. During this period, you can explore various plans and choose one that meets your health needs and budget.
- Medicare: If you are still physically dependent on your parents at age 26 due to a disability, you may qualify for Medicare. Additionally, if your state has expanded Medicare, you may be eligible if your annual income is up to 138% of the federal poverty level.
- Short-term medical plans: These plans can be purchased through the ACA Marketplaces and typically have limited durations, ranging from a minimum of 30 days up to 364 days, and up to three years in some states. The monthly costs for these plans are usually based on your age and health conditions.
- High Deductible Health Plan (HDHP) with a Health Savings Account (HSA): If you are generally healthy and do not engage in high-risk activities or frequent doctor visits, you may benefit from this combination. HDHPs typically have lower monthly premiums, and you can deposit pretax money into an HSA to save for future health expenses. HSA money grows tax-free, and distributions remain tax-free as long as they are used for qualified medical expenses.
It is important to note that different states may have varying rules and options for extending dependent coverage beyond the age of 26. Therefore, it is recommended to research and understand the specific options available in your state.
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Qualifying for Medicaid
In the US, health insurance coverage for children and young adults under their parents' plans usually continues until they turn 26. After this, they must carry their own health insurance plan. However, there are some exceptions to this rule. For instance, if you are still physically dependent on your parents at 26 due to a disability, you might qualify for Medicare. If your state has expanded Medicare, you could also qualify if your annual income is up to 138% of the federal poverty level.
Now, here's information on qualifying for Medicaid:
Medicaid is a federal-state program that provides health coverage to over 77.9 million Americans, including children, pregnant women, parents, seniors, and individuals with disabilities. To be eligible for Medicaid, individuals must meet specific non-financial criteria and be residents of the state in which they receive Medicaid. They must be either US citizens or certain qualified non-citizens, such as lawful permanent residents. Additionally, some eligibility groups are limited by age, pregnancy, or parenting status.
Mandatory Eligibility Groups
Federal law mandates that states cover specific groups, including low-income families, qualified pregnant women and children, and individuals receiving Supplemental Security Income (SSI). States have the option to establish \"medically needy programs\" for individuals with high health care needs and incomes too high to qualify for Medicaid under other groups. These individuals can become eligible by \"spending down\" their income to meet the state's medically needy income standard.
State-Specific Variations
States have the flexibility to expand coverage to populations beyond those in the traditional state plan. Some states have additional programs to provide medical assistance to certain low-income individuals who do not qualify for Medicaid. For example, some states have expanded their Medicaid programs to cover adults with incomes below a certain level.
Applying for Medicaid
To apply for Medicaid, individuals can create an account with the Health Insurance Marketplace and complete an application. If it appears that anyone in the household qualifies for Medicaid or the Children's Health Insurance Program (CHIP), the information is forwarded to the respective state agency for review and enrollment. The state may annually review eligibility and contact individuals regarding renewal.
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Enrolling in an employer-sponsored plan
Once you turn 26, you will no longer be able to stay on your parent's health insurance plan. The Affordable Care Act requires plans and issuers that offer dependent child coverage to make the coverage available only until the child reaches the age of 26. This applies to all plans in the individual market and to all employer plans.
If you do not have access to an employer-sponsored health plan, you can enrol in one through Healthcare.gov during its open enrolment period: November 1 to January 15. The open enrolment period for individual coverage is the same. However, the open enrolment period for employer-sponsored health insurance varies by company.
Special enrolment periods are also available for those who have experienced a qualifying life event, such as losing health coverage, moving, getting married, having a baby, or adopting a child. This period is a time outside the yearly open enrolment period when you can sign up for health insurance. You can also qualify for a Special Enrolment Period if your household income is below a certain amount.
If your parents' plan is sponsored by an employer with 20 or more employees, you may be eligible to purchase temporary extended health coverage for up to 36 months under the Consolidated Omnibus Budget Reconciliation Act (COBRA). To elect COBRA coverage, notify your parents' employer in writing within 60 days of reaching age 26. You will then have 60 days from the date the notice was sent to elect COBRA coverage.
If you have employer-sponsored coverage, your opportunity to drop your coverage is also limited to open enrolment or a special enrolment period. During special enrolment periods, you can enrol in coverage, add or drop family members from the plan, switch to a different plan, or drop your coverage altogether.
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Purchasing an individual plan
In the US, the Affordable Care Act (ACA) requires plans and issuers that offer dependent child coverage to make the coverage available until the child reaches the age of 26. Once a child turns 26, they are considered an adult by the health insurance system and are expected to carry their own health insurance plan.
If you are about to turn 26 and are covered by a parent's job-based plan, you will need to find your own health insurance plan. Your parent can add you to their insurance during the plan's yearly Open Enrollment Period or during a Special Enrollment Period. You qualify for a Special Enrollment Period if you have experienced certain life events, including losing health coverage, moving, getting married, having a baby, or adopting a child, or if your household income is below a certain amount.
If you are covered by a plan your parents purchased in the Healthcare.gov marketplace, you will have access to that plan until December 31 of the year you turn 26. This gives you time to research your available health insurance options and sign up for your desired health plan during open enrollment. The yearly period when people can enroll in a Marketplace health insurance plan is between November 1 and January 15.
If you do not have access to an employer-sponsored health plan, you can enroll in one through Healthcare.gov during its open enrollment period. If you lose access to your parents' health plan before the plan year ends, you are eligible to sign up for a new insurance plan during a Special Enrollment Period.
When purchasing an individual plan, you should consider your health needs and financial situation. If you are a young adult who is healthy and does not engage in high-risk behaviours, you may benefit from a High Deductible Health Plan (HDHP) and a Health Savings Account (HSA). HDHPs typically have low monthly premiums, and you can deposit pretax money into an HSA to save for future health expenses. Your HSA money grows tax-free, and you can use it for qualified medical expenses at any time.
Alternatively, if your income is low, you may qualify for premium tax credits or subsidies that can help reduce the cost of your premiums. These are larger and more widely available from 2021 to 2025 due to the American Rescue Plan and Inflation Reduction Act. You can also look into exchange policies with lower cost-sharing requirements if your household income is below 250% of the poverty level. Catastrophic individual plans are available to applicants under 30 years old and typically have lower premiums than bronze plans, but premium subsidies are not available for these plans.
If you are still financially dependent on your parents at age 26 due to a disability, you may qualify for Medicare if your state has expanded it. If your annual income is up to 138% of the federal poverty level, you can qualify for Medicare, and if it is between 100% and 400% of the federal poverty level, you can qualify for tax credits to help you purchase insurance.
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Frequently asked questions
In most cases, medical insurance coverage provided by a parent's plan will continue until the end of the year the child turns 26. However, if the parent's insurance is provided by their employer, coverage may only continue until the end of the month in which the child turns 26.
There are several options for health insurance after aging out of a parent's plan. These include:
- Enrolling in an employer-sponsored plan
- Purchasing an individual plan in the health insurance marketplace
- Applying for Medicaid if you have a low income
- Purchasing a student health plan if you're a college student between the ages of 17 and 29
In some cases, it may be possible to extend coverage under a parent's plan beyond the age of 26. If the parent's plan is sponsored by an employer, you may be eligible to purchase temporary extended coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA). Additionally, some states allow you to apply for an insurance rider to extend coverage beyond age 26.
