If you’re a young adult looking to save money, being on your parent’s health insurance plan is a good way to avoid an extra monthly expense. But you can’t do it forever—eventually, you’ll need to get your own plan. When choosing your own plan, it’s important to pick a trustworthy healthcare provider that offers a streamlined and patient-first approach. Picking the right provider will help you to conveniently access the healthcare professionals you need to see now and into the future.
This page provides an overview of what you need to know in regards to removing yourself from your parent’s healthcare plan and finding your own. It’s important to understand all of your options so you can make the right choice for your needs in particular.
- Staying on your parent’s insurance plan after the age of 26
- Timeline for choosing a new health insurance plan
- Health insurance options for soon-to-be 26-year-olds
- What to look for in a new Marketplace plan
Staying on your parent’s insurance plan after the age of 26
26 is the magic number when it comes to health insurance because of the Affordable Care Act (ACA), sometimes referred to as “Obamacare”. The ACA states that individuals may stay on their parent’s health insurance plan until the age of 26. After their 26th birthday, they must get their own plans.
There is one exception to this rule. In seven states (Florida, Illinois, New Jersey, New York, Pennsylvania, South Dakota and Wisconsin), adult children over the age of 26 may apply for a health insurance rider. If approved, you will be able to stay on your parent’s health insurance plan until age 29. The general requirements to be approved for a health insurance rider under state law are being under 29 years old, not married, and not eligible for an employer’s health insurance policy. The rest of this page is still relevant for adult children who become eligible for health insurance riders—just replace the number 26 with the number 29.
Timeline for choosing a new health insurance plan
The timeline for choosing your new health insurance plan depends on the type of health insurance plan that your parent currently has:
- If your parent has a plan provided by their employer, you will lose your eligibility at the end of the month in which you turn 26. For example, if your birthday is on November 12th, you will lose your eligibility on November 30th.
- If your parent has a Marketplace plan from healthcare.gov, you will lose your eligibility at the end of the year in which you turn 26. For example, if your birthday is on February 3rd, you will lose your eligibility on December 31st.
Regardless of the type of health insurance plan that your parent currently has, it makes sense to start exploring your coverage options early on to ensure you are covered by or before the time you lose your eligibility.
Health insurance options for soon-to-be 26-year-olds
As a soon-to-be 26-year-old selecting your own plan, you have a few different health insurance options to choose from. Each has positives and negatives to consider before making a final decision.
Individual health insurance
An individual health insurance plan refers to a health insurance plan that is purchased through the ACA Marketplace on healthcare.gov. Young adults who have just turned 26 qualify for the special enrollment period, which allows them to purchase coverage outside of the fixed annual open enrollment period.
Individual health insurance plans are often the most expensive types of plans, but financial subsidies (discounts) are available for individuals who make less than a certain amount of money each year. In general, to be eligible for subsidies on Marketplace plans, you must earn less than 400% of the federal poverty level per year. Some states, such as California, are more generous with subsidies, and offer them to individuals earning less than 600% of the federal poverty level each year.
In general, the less you make, the more subsidies you are potentially eligible to receive. Go to healthcare.gov and the subsidies you are eligible to receive will be spelled out in plain language when you go to select your new plan.
The requirements to qualify for Medicaid are different depending on which state you live in. To learn more about Medicaid, visit the eligibility page on medicaid.gov.
Many colleges offer health insurance coverage for full-time students. This type of coverage is usually optional and not a requirement for college enrollment.
Student health insurance coverage can be easy and convenient, but there are potential drawbacks as well. For example, the coverage may not be as comprehensive as you would like, or it may not cover the doctors and specialists that you need to see. In some cases, it may even be more expensive than the other options on this list.
If you are a student, it makes sense to check out your school’s student health insurance offers—but it’s wise to also explore the other options on this list, as student health insurance plans are not necessarily guaranteed to be the most affordable or comprehensive by default.
The employer mandate under the ACA states that employers are required to offer healthcare insurance to full-time employees and their dependent children if the company has 50 or more full-time or full-time equivalent employees. Group health insurance plans offered via employer coverage are often more affordable and potentially more comprehensive than an individual plan from the Marketplace is. Click here to learn more about the specifics of the employer mandate and read common FAQs.
The COBRA (Consolidated Omnibus Budget Reconciliation Act) almost always requires your previous employer to allow you to continue on the employer group health plan for up to 18 months after quitting or being fired. The exception is if you are fired because of gross negligence.
The upside of COBRA is that you can often maintain the same coverage you did before leaving your job. The downside is that a COBRA plan is often more expensive than an ordinary employer plan because the employer does not help out by paying a portion of the premium for you.
COBRA may be applicable for soon-to-be 26-year-olds who recently left their jobs, whether voluntarily or involuntarily. Click here to learn more about the specifics of COBRA.
What to look for in a new Marketplace plan
If you decide to pick a healthcare plan through the Marketplace (organizations found in each state that allow you to purchase health insurance) on healthcare.gov, you will be able to choose from four tiers of plans. The tier that is ideal for you will depend on your specific healthcare needs, particularly with regards to how often you use healthcare services.
Gold plans have the highest premiums, which means you pay the highest monthly fee out of all of the Marketplace plans. However, gold plans also have the lowest deductibles, which means you pay very little when you actually go to use a healthcare service that you’re covered for.
Gold plans are ideal for individuals who make frequent use of healthcare services, such as those who have chronic conditions.
Despite the misleading nomenclature, silver plans are not inferior to gold plans in any way. The only difference is with regards to how premiums and deductibles are handled. With silver plans, premiums are lower than they are for gold plans, but at the expense of higher deductibles when you do use healthcare services.
Silver plans are ideal for individuals who still make consistent use of healthcare services, though perhaps not as frequently as those with chronic conditions.
For individuals over 30, a bronze plan has the lowest premiums and the highest deductibles. If you are eligible to receive subsidies due to being in a lower income bracket, these subsidies will usually apply primarily to bronze plans.
Bronze plans are ideal for those who rarely make use of healthcare services or those who wish to avoid paying high monthly premiums.
Catastrophic plans are a special type of plan available only to individuals under 30 years of age. They provide almost no coverage beyond worst-case-scenario events. Specifically, catastrophic plans usually cover three primary care physician visits per year, but nothing else until the annual plan deductible is paid by you ($6,600 per year).
You will be able to see if you are eligible for a catastrophic plan when you input your personal information on healthcare.gov.
If you’re about to turn 26 (or already have), you will almost always need to get off your parent’s policy and onto your own health insurance plan, except in the seven states where you can apply for a health insurance rider. When selecting your new plan, you can acquire health insurance through a variety of sources, including the Marketplace on healthcare.gov, Medicaid, school-based coverage, an employer plan, or COBRA. If you choose to go with the Marketplace, you will have four tiers of healthcare coverage to choose from: gold, silver, bronze, and catastrophic.
No matter where you decide to get your coverage from or which tier you choose from healthcare.gov, it’s wise to pick an insurance company that puts the physical and mental well-being of the patient first. Even if you’re a healthy young adult and you don’t foresee yourself making use of healthcare services very often, if the time comes when medical attention is required, the last thing you want is to be battling with an unhelpful insurance company. The right insurance company will be completely transparent with you, have helpful customer services, and always guarantee that you can conveniently access the healthcare services you’re covered for.