Insurance Basics: 26 Things You Need To Know

Turning 26 is a significant milestone for many reasons, including the fact that it often marks the end of being covered by your parents' health insurance plan. While individuals can typically remain on their parents' health insurance until they turn 26, there are some variations in coverage terms. It's important to note that parents are not legally obligated to maintain their children on their insurance until that age. Losing parental health insurance coverage at 26 is considered a qualifying life event, allowing those affected to take advantage of a Special Enrollment Period for health insurance outside of the usual Open Enrollment Period. This period can vary, so it's essential to review your plan's specifics. Understanding your options and planning ahead are crucial to ensure continuous coverage and avoid any gaps in protection.

You can no longer be covered by your parents' insurance plan

In most states, individuals can no longer stay on a parent's health insurance plan after they turn 26. This rule was established by the Affordable Care Act (ACA), also known as "Obamacare". Before the ACA, insurance companies would routinely drop young adults from their parent's policies once they reached a certain age or stopped attending college. Now, the cut-off age is 26, and this applies regardless of the dependent's circumstances.

The timeline for when coverage ends depends on the type of insurance plan. If you are covered under your parent's employer policy, you will be covered until the end of the month in which you turn 26. This means that if your birthday is on May 1, you will be covered until May 31. If you are on your parent's marketplace plan, your coverage will end on December 31 of the year you turn 26, even if this is mid-year.

There are a few exceptions to the rule that you must be over 26 to remain on your parent's insurance plan. Eight states (Florida, Illinois, Nebraska, New Jersey, New York, Pennsylvania, South Dakota, and Wisconsin) allow individuals to stay on their parent's health insurance plans beyond the age of 26. Additionally, if you have a qualifying disability, you may be able to stay on your parent's plan indefinitely, depending on the state.

If you are approaching your 26th birthday and are currently covered by your parent's insurance, there are a few things you should do to ensure you remain covered. First, check with your parent's insurance provider to find out the exact date that your coverage will end. Then, explore your options for alternative coverage, such as employer-based insurance or a state health care marketplace plan. If you are unemployed or your job does not offer health insurance, you may want to consider applying for Medicaid or the Children's Health Insurance Program (CHIP).

You can apply for a Special Enrollment Period

If you are about to turn 26 and are covered by your parent's health insurance plan, you need to take action to avoid losing your health coverage. You can apply for a Special Enrollment Period, which is a period outside of the yearly Open Enrollment Period (November 1 – January 15) when you can sign up for health insurance.

To qualify for a Special Enrollment Period, you must have experienced certain life events, such as losing your health coverage, moving, getting married, having or adopting a child, or having a household income below a certain amount. Losing your parent's coverage because you turned 26 is considered a qualifying life event. You may also qualify if you lose or are denied Medicaid or CHIP coverage due to changes in eligibility or income.

It's important to note that if you lose your coverage because you didn't provide the required documents, you won't qualify for a Special Enrollment Period. Additionally, divorce or legal separation without losing coverage doesn't qualify you for this period.

If you are turning 26 and your parent will still claim you as a tax dependent for that year, you may qualify for savings based on their income and anyone else on their federal tax return. You can stay on your parent's application for Marketplace coverage and they can enrol you in your own plan during Open Enrollment. Remember to check with the plan or your parent's employer for the exact date your coverage will end, as it could be during or shortly after the month you turn 26.

You can buy an individual plan on the ACA Marketplace

If you are turning 26 and are insured under your parent's plan, you need to take action to avoid losing your health coverage. If your employer offers health insurance, you can qualify to enroll outside of their yearly Open Enrollment if you didn't initially enroll when it was offered to you, and if you lost your parent's coverage because you turned 26. You may have a limited time to enroll in job-based coverage, so it is important to contact your job's human resources representative before turning 26 to understand your options.

If your employer offers health insurance that is considered "affordable" and you decide not to enroll in it, you generally won't qualify for a tax credit to lower your monthly insurance payment. However, you can purchase an individual plan on the ACA Marketplace. The ACA Marketplace offers a wide range of health insurance plans, including coverage for medical, dental, and vision care. These plans are purchased directly by individuals rather than through an employer or government program.

The ACA Marketplace has an open enrollment period each year, typically from November 1 to January 15, during which you can enroll in a health insurance plan. Outside of this period, you may still be able to enroll during a Special Enrollment Period if you experience certain life events, such as losing health coverage, moving, getting married, or having a baby, or if your household income falls below a certain threshold.

It is important to note that the benefits and costs of ACA Marketplace plans can vary by state and plan category. Some plans may require copayments, deductibles, and/or coinsurance. Additionally, under the American Rescue Plan Act of 2021 (ARPA) and the Inflation Reduction Act of 2022, you may qualify for financial subsidies to lower your premiums when enrolling in ACA Marketplace coverage. These subsidies can come in the form of tax credits or cost-sharing reductions to help manage your healthcare expenses.

You can get your own job-based insurance plan

If you are about to turn 26, you will need to take action to get your own health insurance coverage. If your employer offers health insurance, you can qualify to enroll outside of the yearly Open Enrollment Period. This is known as a Special Enrollment Period. You can qualify for this Special Enrollment Period if you didn't enroll in the employer coverage when it was first offered to you and you lost your parent's coverage because you turned 26. You may have a limited time to enroll in job-based coverage, so it is important to contact your job's human resources representative before turning 26 to learn about your next steps.

If you have a Marketplace plan and are offered health insurance through your job, you may want to cancel your Marketplace plan. If you have an offer of job-based insurance, you won't qualify for savings on a Marketplace plan. You can still choose to get job-based coverage, but you won't automatically get it by applying. You can enroll in a Marketplace plan if you leave your job for any reason and lose your job-based health insurance. You'll qualify for a Special Enrollment Period to enroll and get coverage for the rest of the year.

If you have a Marketplace plan and get an offer of job-based insurance, you may no longer qualify for savings on your Marketplace plan even if you don't accept the job-based coverage offer. If you have already accepted the offer of job-based insurance, you may want to cancel your Marketplace plan for yourself and anyone else in your household who is eligible for the new job-based coverage. You won't qualify for savings if you're enrolled in a job-based plan. With most job-based health insurance plans, your employer pays part of your monthly premium. However, if you enroll in a Marketplace plan instead, your employer won't help pay your premiums.

If you are offered health insurance through your job, you can use a worksheet to find out if your QSEHRA meets the requirements for "affordability". You may be able to find this information in an online employee portal or account, a letter, email, or other documents from your employer. You can also ask your employer to fill out an Employer Coverage Tool.

You can apply for a health insurance rider to remain on your parents' plan

In the United States, the Affordable Care Act (ACA) ensures that individuals can be included in their parents' health insurance plans as dependants until they turn 26. After this, they will need to take action to avoid losing health coverage.

However, in some states, there are provisions to remain on your parents' health insurance plan beyond the age of 26. In seven states (Florida, Illinois, New Jersey, New York, Pennsylvania, South Dakota, and Wisconsin), you can apply for a health insurance rider to stay on your parents' plan. In general, you can qualify for a rider as long as you are under 29, unmarried, and do not have access to health insurance through your employer. The exact requirements vary by state, and each state has a different end date for when you will lose your parents' coverage. For example, in New York, you can apply to stay on your parents' plan until you turn 30, whereas in Wisconsin, the age limit is 27.

If you are unable to remain on your parents' plan, you can take advantage of several affordable or free health insurance options, depending on your income level and state of residence. You can enroll in a health insurance plan through your state or federal marketplace, or consider private health insurance through HealthCare.gov or your state health exchange. If your income is low, you may qualify for free government health insurance, called Medicaid, or ACA subsidies, also known as premium tax credits, which reduce your monthly health plan payments.

Frequently asked questions