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Turning 26: Health insurance tips for when you lose coverage under your parents' plan

Young woman surrounded by question marksOne feature of the Patient Protection and Affordable Care Act allows young adults to stay on their parents’ health insurance plan until age 26. Between 2010 and the start of open enrolment in 2013,  2.3 million young adults gained coverage by remaining on their parents’ plan, according to the latest data from the Department of Health and Human Services. But what happens when these young adults have their 26th birthday?

Penny Gusner, consumer analyst for Insure.com, answers that question, among others related to options for health insurance coverage after age 26, for you below.

Can you stay on your parents’ health insurance after 26?

The short answer is no, you can't, in most states. The Affordable Care Act only allows young adults to be covered under a parent policy until age 26. However, there are some exceptions, as a handful of states extend coverage to age 30 or 31, albeit with some limitations. For example, New York residents may stay on their parents’ policy until age 30 if you are unmarried. In New Jersey, it’s 31 for those who are unmarried and have no dependents. To see your state laws regarding this, visit the National Council of State Legislatures website.

Do I lose my health insurance when I turn 26?

Not necessarily.  If you are currently covered under your parents’ group health plan and you will be turning 26 soon, typically your parent’s employer is require under the ACA, to make coverage available until the end of the month in which you turn 26. However, some plans may cover a dependent until the end of the year in which the dependent turns 26. 

How long do you have to get health insurance after you turn 26?

Regardless of when your parents’ plan ends your coverage, you will have a 120-day special enrolment window in which to buy a new health insurance policy on the marketplace for ACA plans. During this time, which begins 60 days before you turn 26 and ends 60 days after, you can purchase a new medical plan. If you are buying an individual plan that is not on the ACA marketplace, you have 30 days after you turn 26.

What are the most common options for health insurance after age 26?

There are a few choices for young adults that are aging off of their parents’ health insurance plan as it opens up a special enrollment period to find other coverage. First, there is COBRA which is temporary extended health insurance that can be purchased for up to 36 months. This option is typically pricey as you are continuing on the coverage you had previously but without your parents’ employer paying any portion of the plan costs. You have up to 60 days to elect COBRA coverage. 

A better option, if you are employed, is to join your company’s health insurance plan. 

Another option if you are married, to be placed on your spouse’s health plan. You must ask your spouse’s employer to add you to the plan within 30 days of your loss of coverage under your parent’s plan. 

A fourth choice is to shop for your own individual plan in your state’s ACA marketplace or in the individual market. If you qualify for subsidies, then you should shop through the marketplace to obtain coverage.

A final choice is buying a catastrophic plan, which is available to those under the age of 30. This type of plan comes with high deductibles but low monthly premiums. “With this plan, free preventive services that the ACA requires are covered and a few primary care visits but otherwise you pretty much must pay out of pocket until your deductible is met.  That is why this is only recommended for healthy individuals,” says Gusner.

What are some things to consider when buying individual health insurance?

Gusner says when buying an individual health insurance plan, consider the overall price of the plan, the amount you pay toward your care, and the flexibility you will have to see specialists and doctors in your network. Compare plans from at least three insurers.

“There is of course the cost of the premiums with each, but then also the co-payments, deductibles and coinsurance. Compare the numbers to see which insurer makes more financial sense,” says Gusner.  “Then there is the network of doctors and hospitals, does one give you better choices for the area in which you live?”

To be sure you are choosing from among the top-rated carriers, review Insure.com’s ranking of the Best Health Insurance Companies, based on a survey of 3,160 policyholders on customer service, price, claims handling, website/app merit and renewal.

It may be tempting to skip health insurance to save money, if you are young and healthy. Is this advisable? Why or why not?

The belief that young adults are healthy and don’t need coverage is bogus. One in six young adults has a chronic illness, for instance, cancer, diabetes or asthma, according to the Center  for Consumer Information and Insurance Oversight, which operates under the Department of Health and Human Services. Nearly half of uninsured young adults report problems paying medical bills. Aside from the statistics, no one can predict the future, says Gusner, which is why people have insurance in the first place.

“No, it’s not advisable to go without insurance because you never know what can happen.  While you are young and healthy today, accidents can happen as well as severe illnesses that are totally unexpected,” says Gusner. “If you’re young and healthy and want to pay less, you should at least look into a catastrophic plan. That will at least provide coverage for some preventive care and coverage for a worst-case scenario, though after a big deductible.”

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