How Long Can You Stay on Your Parents’ Health Insurance Plan?
Health insurance coverage is both confusing and expensive, especially if you’ve never dealt with it before.
When you turn 18, you may decide to strike out on your own. In these cases, young adults usually must make major financial decisions themselves.
The official move out from your parents’ house may be delayed until you graduate if you go to college.
Either way, mom and dad may help out if they’re able. This may insulate you from some of the harsh realities of taking care of everything yourself.
But can your parents help you with the confusing and expensive aspects of health insurance? And what happens if your parents can’t help out?
The Affordable Care Act (ACA) made some changes to how health insurance works. These changes could work in your favor.
Here’s what you need to know.
Can You Stay on Your Parents’ Health Insurance Plan?
Thanks to the Affordable Care Act, young adults can often stay on their parents’ health insurance plan.
To do so, the federal law states you must be under age 26.
This rule applies to both healthcare marketplace insurance plans and health insurance plans offered by employers.
The law is pretty generous for the people that qualify under it.
For instance, there aren’t limits that exclude you from receiving coverage if you’re married.
- You don’t have to live with your parents to qualify for coverage.
- You don’t have to be a full-time student, either.
- You don’t even have to be financially dependent on your parents.
For you to be eligible to be covered, your parents’ health insurance plan must offer coverage to dependent children.
If it does, your parents should be able to keep you on their plan until you turn 26.
The plan can’t charge extra because you’re over age 18. It can only charge the usual amount for adding a dependent to the health insurance plan.
This can still be expensive, though.
Your parents may ask you to cover this cost since they have to pay it out of their paycheck.
No matter who pays for it, it’s still a good idea to shop around and check to see if you have cheaper options with similar or better coverage.
It doesn’t always work
This won’t work for all circumstances. Certain situations may mean your parents’ insurance plan wouldn’t cover you.
While you can get coverage even if you have a child yourself, your child can’t get coverage on the plan.
There are a few times when you won’t be able to get added to your parents’ health insurance plan even if you’re under age 26.
If your parents use Medicare for health insurance, you won’t be able to get on their plan. Medicare doesn’t offer dependent health insurance, which is what you would need.
Not all workplace health insurance plans cover dependent children. If your parents’ plan doesn’t, you can’t be added.
State laws may extend age limit
While the age 26 rule is required by federal law, states may choose to extend benefits beyond your 26th birthday. States cannot offer less coverage that ends earlier, though.
For example, New York allows certain people to stay on their parents’ plan until age 29.
Check with your state’s laws to see if you may qualify to remain on your parents’ insurance plan past age 26.
When you become too old for parents’ health insurance
Once you turn age 26, you’re no longer eligible to stay on your parents’ plan in most cases.
On your birthday, your coverage stops.
Thankfully, you can switch your health insurance plan when this happens.
When you lose coverage on your 26th birthday, you qualify for a special enrollment period. This is because you have a qualifying life event.
The special enrollment period allows you to sign up for a health insurance plan on a health insurance marketplace.
It also allows you to change your health insurance plan selections with your employer if they offer them.
Talk to your human resources, payroll or benefits department at your employer ahead of time to discuss how this works.
Again, it must be noted:
The special enrollment period is only for a limited time, so you must act fast.
How to Find Your Own Health Insurance
If you’ve never looked for health insurance before, the process is overwhelming.
You have to learn health insurance terminology and where to look for health plans.
The first place to check for health insurance is your employer. See if your employer offers a health insurance plan you may qualify for.
The best part:
Employers often subsidize, or pay for, part of the cost of health insurance for their employees.
This can result in huge savings that generally make it worth selecting your workplace’s insurance plan over other options.
Of course, this varies depending on your specific situation. You should still shop around to make sure you’re getting the best deal.
Health insurance marketplaces
The next place to look for health insurance plans is the health insurance marketplace. Some states have their own state marketplace. These states include:
- District of Columbia
- New Jersey
- New York
- Rhode Island
All other states use the federal marketplace website, Healthcare.gov, to display your health insurance marketplace options.
Health insurance brokers
Another option is talking to a health insurance broker.
Brokers can usually access health insurance plans through several health insurance companies. Even better, they can help you understand your options.
They should have access to Affordable Care Act-compliant plans and may have other options, too.
What to Look for in a Health Insurance Plan
Health insurance plans have many factors to consider.
First, look at the monthly cost. This is usually called your premium which is the fee you pay to have health insurance.
Your employer may subsidize this cost, making it lower than it would be if you paid for the policy yourself.
The monthly cost will be determined based on many other factors, too.
In general, the more the health insurance plan pays, the higher your premiums will be. The more you have to pay before coverage kicks in, the less the monthly premium will be.
These costs come in many different forms.
First, look at how much you’ll have to pay before coverage kicks in. This is called your deductible.
Health insurance won’t pay anything until you reach your deductible except in certain cases. Exceptions exist for specific preventative care and other mandated requirements.
Copays or coinsurance
You’ll also want to look at other financial aspects of your plan.
You may have copays which are amounts you have to pay per event. Copays are a flat dollar amount such as $25 per visit.
Alternatively, you may have coinsurance. This is like a copay but is a percentage of the cost rather than a flat dollar amount.
Plans have an out of pocket maximum, as well. This is the most you have to pay in a year before the health insurance plan covers all qualifying expenses fully without any contribution from you.
Your plan may incentivize you to visit certain providers. This list of providers is called a network.
Your individual health insurance plan’s network is important.
Look at the list of providers your plan has contracts with. These contracts usually mean the provider will offer services at lower prices than other providers.
If you go to in-network providers, you generally receive a lower cost overall.
If you go to an out-of-network provider, you may have to pay much more. This is made even worse because your health insurance may cover less of the cost, too.
For instance, a plan may have a 10% coinsurance requirement for in-network providers. However, it may impose a 50% coinsurance requirement for out-of-network providers.
How to choose your health insurance plan
Choosing a health insurance plan is a balancing act.
You need to weigh the following factors to find the plan that’s the best fit for you:
- Type of health insurance plan
- Network of providers
- Out of pocket maximum cost
- Possible tax credit you may qualify for
- Other factors
Making this decision for the first time can feel overwhelming. Do your best to find the plan that will work best for you.
Throughout the year, find out what works and what doesn’t work for you. Then, you can make a change to a better fit the next time you’re able, if possible.
If you use a marketplace plan, you can change plans at the next open enrollment or special enrollment period.
The same goes for employer-based health insurance plans, assuming they have multiple plans to choose from or you want to switch to a marketplace plan.
Now you know how long you can stay on your parents’ health insurance plan according to federal law.
Make sure to check with your state laws to see if you may qualify to remain on their plan past 26 years old.
When you’re forced to get your own health insurance plan, compare options through your employer and the healthcare marketplace in your state.
Then, select the plan that makes the most sense for you based on your situation.