Answering the question “How Long Can You Be on Your Parents Insurance?” Keep in mind that current federal law allows you to stay on your parent’s policy until the age of 26, and some state laws allow you to stay on even longer.
When it comes time to get your own coverage, it’s critical to understand how to get a policy and the type of plan that will best suit your needs.
Some plans have lower premiums, while others cover more healthcare costs. But the most important thing is to keep your health insurance coverage, even if you’re young and healthy.
Health Insurance through Your Parents
Health insurance through your parents is a common option for young adults, allowing them to remain on their parents’ health insurance plan until a certain age, usually 26.
This provision was introduced as part of the Affordable Care Act in 2010 to increase healthcare coverage for young adults transitioning into adulthood.
It provides an essential lifeline for those who may not have access to employer-sponsored health insurance or cannot afford individual plans.
This extension allows young adults to maintain health coverage under their parents’ policy, ensuring they have access to necessary medical services and preventive care during a critical stage of life.
Length of Health Insurance through Your Parents
The Affordable Care Act (ACA) requires that children be covered by a parent’s health insurance plan until the child reaches the age of 26 if the parent’s health plan covers dependents.
According to the Department of Labor, the rule applies to both unmarried and married children, as well as all types of health plans, including employer-sponsored coverage.
The law also allows you to remain on your parent’s plan until you reach the age of 26 if you:
- Go to college or drop out of college
- Adopt or have a kid
- Move out of your parents’ cottage
- Are not deemed to be a dependent on your parents’ tax returns
- Refuse a proposal of an employer-sponsored cheap health insurance
If your parents have health insurance in California for instance, through the marketplace, you can stay on the policy until December 31 of the year you turn 26, or the oldest age permitted by your state’s insurance code.
Some States Extend the Age Limit
Some states adhere to the ACA’s age-26 rule, while others have laws that allow you to remain on your parent’s health insurance policy for a longer period of time—but only under certain conditions.
Despite the exceptions provided by the following states, healthcare laws are subject to repeal or revision.
Health Insurance Options for Young People
If you have aged out and desire to find new health insurance, you have a few options.
Employer-Sponsored Health Insurance
Some companies provide group health insurance to their employees. The employer selects the plan and often pays a portion of your premium in a group plan.
Some group plans may restrict the doctors and hospitals from which you can seek services, and you may not be able to keep the same coverage if you change jobs.
In 2021, the average cost of employer-sponsored coverage will be $7,739 for single coverage and $22,221 for family coverage.
According to the Kaiser Family Foundation, workers typically pay 17% of the cost for single coverage and 27% for family coverage.
The Health Insurance Marketplace
The marketplace offers health insurance to people who do not have health insurance through their employer. Many participants in the marketplace receive subsidies that reduce their premiums.
You can research and purchase marketplace coverage through HealthCare.gov or your state’s marketplace. You can apply through the marketplaces during “open enrollment” periods, which typically run from November 1 to January 15.
Some insurance companies provide short-term health insurance plans that provide basic health coverage but do not adhere to ACA regulations.
If you are not eligible for marketplace plans, these relatively inexpensive plans can serve as a stopgap. Preexisting condition coverage may be denied under short-term plans.
Consolidated Omnibus Budget Reconciliation Act (COBRA)
The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows employees with employer-provided health insurance to keep their coverage.
COBRA coverage is only available in the event of a qualifying event, such as job loss, reduction in work hours, the policyholder’s death, or divorce from the policyholder.
The ACA also requires that COBRA coverage be extended to dependent children until they reach the age of 26.
Although COBRA can help you bridge the gap if you lose your coverage, you must often pay the entire premium out of pocket.
Medicaid is a health insurance program provided by the federal and state governments that is available to low-income adults, elderly adults, people with disabilities, children, and pregnant women.
Medicaid is administered by states in accordance with federal guidelines. Medicaid eligibility is determined by your modified adjusted gross income.
You must be a U.S. citizen or have a qualifying non-citizen status, such as permanent residency, to qualify. You must typically be a resident of the state in which you apply for Medicaid.
School-Sponsored Health Insurance
Many colleges and universities provide students with health insurance policies. A school-based plan could cost around $1,600 for one semester and $4,200 for the entire year.
Copayments for office visits can range from $30 to $150 for emergency room visits. Check with your school to see what its plan includes.
Choosing the Type of Insurance Plan
Before you shop for your first health insurance policy, it’s critical to understand the different types of plans available, the level of coverage you can expect, and the associated costs.
Some of the most common types of health insurance plans are listed below.
Exclusive Provider Organization (EPO)
With an EPO, the plan will only pay expenses if you use the doctors, hospitals, and other services that are part of the specified network unless you urgently need medical attention.
Health Maintenance Organization (HMO)
HMOs enter into agreements with physicians to provide care and preventive healthcare services, sometimes within a defined service area.
With the exception of emergencies, this kind of plan only pays for services rendered by caregivers who are part of its network.
Point of Service (POS)
When you use a POS and a network, you pay less for medical care from doctors and hospitals. You need a referral from your primary care doctor to access specialist care.
Preferred Provider Organization (PPO)
When you seek care from doctors and hospitals in a network, PPOs offer discounted services. You do not need a referral to use this plan for specialist care.
Health Insurance Costs
Health insurance coverage demands that you pay a monthly premium. However, you’ll also have to pay other costs when you need care.
The deductible is the amount of money you must pay out of pocket before the policy begins covering costs.
For instance, if your annual deductible is $1,500, you must pay 100% of medical costs each year up to $1,500. After which, your insurance plan takes off.
Copays are fixed payments for specific services, such as urgent care, primary care, or a specialist visit. You expend before or after you meet your deductible, depending on the plan.
For instance, a plan may require you to pay a $20 copayment each time you visit your doctor.
Coinsurance is a portion of the service fee that you are required to pay. Depending on the health plan, coinsurance may change.
An 80/20 coinsurance plan, for instance, would require you to cover 20% of medical expenses while the insurer would cover the remaining 80%.
Nevertheless, not all plans require you to pay coinsurance; however, the monthly premium for the plans that don’t may be higher than the premium for the plans that do.
Your out-of-pocket expenses for healthcare services may be limited by a health insurance plan every year.
- For the year 2022, the out-of-pocket maximum for Marketplace insurance plans is $8,700 for single coverage and $17,400 for family coverage.
- For 2023, Marketplace plans cap out-of-pocket costs at $9,100 for single coverage and $18,200 for household coverage.
Do Young People Really Need Health Insurance?
If you’re young and healthy, you may not believe you need health insurance until you’re older.
According to the Centers for Medicare and Medicaid Services, treatment for a broken leg can cost up to $7,500, and a hospital stay can cost up to $10,000 per day.
If you do not have health insurance, you will be responsible for the entire cost of medical expenses if you are injured or become ill.
According to a 2019 survey conducted by the Kaiser Family Foundation and the Los Angeles Times, nearly 20% of households have delinquent medical debt, and about 9% of households have filed for bankruptcy due to health care expenses.
Furthermore, consider the possibility of future health issues. Preexisting conditions, such as diabetes or heart disease, are not covered by ACA-compliant insurance plans, according to federal law.
Frequently Asked Questions (FAQs)
Can I stay on my parent’s insurance after the age of 26?
Federal law typically allows you to remain on your parent’s insurance policy until the age of 26. However, some states allow you to remain on their insurance until the age of 29 or 30.
Other states only allow dependent children who are disabled and unable to work for themselves.
What are my insurance options when I turn 26?
Check with your employer because some companies provide group health insurance to their employees. The employer usually pays a portion of your premium, making it less expensive than purchasing a policy separately.
COBRA (Consolidated Omnibus Budget Reconciliation Act) coverage often allows you to continue receiving insurance on your parent’s employer’s plan after your 26th birthday, but the coverage may not be indefinite.
To Round Up
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