When you’re turning 26, health insurance immediately becomes more of a concern. The transition from being covered under a parent’s plan to finding coverage on your own can be quite daunting — or it can be reasonably easy, if you follow the advice here.
If you’re turning 26 soon, or have parents who will qualify for Medicare before you turn 26, you will need to find your own health insurance coverage. To make the process easier, we created this guide to help you understand your numerous coverage options.
When Am I No Longer Covered By My Parent’s Health Insurance?
The exact time when your parent’s plan stops covering you will depend on how your parents get their health insurance. Do your parents have coverage through the Affordable Care Act’s government-run (Obamacare) Marketplace, or are they covered by a private plan at work?
- If your parent is covered by an Obamacare Marketplace plan: You have until December 31 of the year you turn 26 to sign up for your own health insurance plan. However, don’t wait for the last minute. You must enroll in your Marketplace plan by December 15 to get coverage that begins on the first of the year. Note: Open enrollment in most states ends on January 15.
- If your parent is covered by a private employer-sponsored plan: Your coverage under your parent’s employer-sponsored health insurance plan will end on the last day of the month that you turn 26. For example, if your birthday is April 20, your coverage will end on April 30.
- Depending on which state you live in, you may be able to get an “insurance rider” that extends your coverage beyond age 26. Young adults have the option of applying for a health insurance rider to remain on their parent’s plan beyond age 26 in seven states: Florida, Illinois, New Jersey, New York, Pennsylvania, South Dakota and Wisconsin. If you live in New York, for instance, you can apply to stay on your parent’s plan until you turn 30. State-specific information about health insurance riders can be found here. In general, you can qualify for a rider so long as you’re under 29, unmarried, and do not have access to health insurance through your employer.
What Happens When My Parent’s Plan Drops Me?
Aging out of your parent’s plan makes you eligible for a Special Enrollment Period, so after turning 26 you will be able to sign up for your own plan within a specific 120-day period or during the year-end Open Enrollment Period. That particular Special Enrollment period begins 60 days before you’re dropped from your parent’s plan and ends 60 days after you lose coverage.
To avoid a gap in coverage, play it safe by picking a plan before or during your birthday month. Make securing health insurance a birthday gift to yourself. You must sign up within the first 15 days of the month to have coverage kick in the following month. For example, if you need insurance starting December 1, you must enroll by November 15. If you enroll on November 16 or later, your coverage will skip a month and not start until January 1. Keep in mind that you cannot qualify for a Special Enrollment period if you voluntarily withdraw from your parent’s insurance plan, or if your parent(s) fail to pay their monthly insurance premiums and the insurance expires.
I’m Turning 26 Soon: What Are My Coverage Options?
- Enroll in Your Employer’s Group Plan. If you have the option of enrolling in your employer’s group health policy, you can do that at any time — hopefully well before you turn 26 to get comprehensive coverage at relatively good price. If you don’t have coverage through your job when you turn 26, you may only have until the end of the month to enroll in a new plan to maintain continuous coverage, depending on the terms of your parent’s group policy. Also, if you purchase an Obamacare plan or a plan at work, you must drop off your parents’ plan before your new coverage can begin.
- Buy an Individual (Obamacare) Plan on the online ACA Marketplace. If you’re self-employed, unemployed, or cannot get health insurance through your job, one option is to shop for a plan on your state or federal Marketplace. A number of plans are available through the online ACA Marketplaces. Roughly half the states and the District of Columbia have their own Marketplace websites. If your state does not maintain a Marketplace, visit the federal Healthcare.gov to shop for plans there. When you apply for coverage on any Marketplace, you will see information pop up about whether you’re eligible for premium or cost-sharing subsidies, plus the amounts, as well as whether you qualify for virtually free and immediate Medicaid.
- Join a Short-Term Health Plan. Short-term plans of around 90 days each can be renewed to provide coverage up to 364 days, and up to three years in a few states. These are limited plans and typically set monthly costs based on age and health conditions. For young people, that can make these plans an inexpensive choice, even though ACA plans typically charge healthy young people only one-third as much as seniors. But short-term insurance doesn’t cover as much as ACA plans; they also don’t cover preexisting conditions, including maternity.
- Get Coverage from an Insurance Company. You can find private coverage outside the government Marketplace. Or you can contact any health insurance provider to inquire about your individual healthcare plan options. Another option is to check a privately-run marketplace where you can review several options at once.
- Research Coverage With a Broker or Agent. Brokers and agents alike can help you compare different plan options and process your enrollment when you’re ready to sign up. But brokers and agents aren’t interchangeable. Brokers sell plans offered by a number of different insurance companies; agents typically sell plans on behalf of only one company. Using an agent or broker is free. You don’t pay them any fees; the insurers pay them based on sales.
What if You Need Your Own Healthcare Before 26?
You can buy an Obamacare plan before you turn 26, for example, if your parents choose to not allow you to enroll in their coverage. The ACA also offers an inexpensive but only bare catastrophic coverage for people under 26 seeking health insurance on their own.
Fortunately, there are a number of resources for people between the ages of 18 and 25 to get health insurance. It will only take a little extra research to find a number of options.
Aging Off Your Parents’ Plan: A Recap
Before the ACA, young people typically had few options for buying health insurance, but it’s different now. Before you turn 26, set aside some time to learn about full-coverage ACA plans and other options, including lower-cost but limited short-term insurance, assuming your state allows it. And always keep your enrollment deadlines in mind as you approach 26. With preparation, you can make aging out of your parents’ health insurance plan a lot less stressful and ultimately rewarding by enrolling in your own health plan.