Once young adults turn 26, it’s essential that they establish an alternative source of medical coverage.
On reaching 26 you are entitled to select a health plan during a special enrollment period. Here are four points you should keep in mind before making your selection.
Employer Plans
People born between birth and 26 are eligible to stay on their parent’s health insurance until age 26 – this applies for both employer-sponsored plans and Affordable Care Act Marketplace plans. Some health insurers provide “continuation” coverage once young adults turn 26; check with their insurer or human resource department to see if your parent offers this. If not, other options such as group plans, the ACA Marketplace or Medicare may offer coverage;
Dependent upon your parents’ plan type and state, whether or not it will continue covering you after turning 26 may vary. For instance, if their employer-sponsored plan falls under the Affordable Care Act’s minimum value standard (requiring that it pay at least 60% of average costs associated with health services covered under its coverage), and you are unmarried and do not have children yet it may terminate coverage when you turn 26.
However, if your parents’ employer-sponsored health plan does not meet the minimum value requirement or other reasons force them to terminate your coverage, an open enrollment period for an individual plan in the Affordable Care Act Marketplace opens 30-60 days before and 60-80 days after you lose parental coverage. During this timeframe you can also apply for subsidies to help lower the cost of purchasing individual coverage.
Notably, several private health insurers have come forward to offer coverage to young adults who have graduated or aged out of a parent-sponsored plan due to graduation or turning 24 years old, at a small monthly premium cost. You can find this type of stop-gap coverage listed at eHealth’s Guide to Health Insurance for Young Adults.
Marketplace Plans
Make an informed choice between staying on a family plan or opting for an individual health insurance policy by learning more about some common healthcare terms like deductibles and coinsurance, how medical conditions influence monthly premiums and which doctors and hospitals are considered in-network or out-of-network for various plans, as well as whether an individual qualifies for premium tax credits when shopping on the marketplace. This will allow individuals to make an informed choice.
The Affordable Care Act (ACA) permits individuals under 26 to remain covered under their parents’ ACA-compliant health insurance plan until either year-end, or until they start another job offering coverage – depending on state laws. Once an individual turns 26 however, they must secure coverage either through their employer plan or on the marketplace during open enrollment periods.
To be eligible to shop on the marketplace, an individual must be a citizen or national of the United States with an active Social Security number. It is operated jointly by both federal and state government; providing an easy way for shoppers to compare health insurance options available as well as discover potential savings through federal subsidies such as cost-sharing reductions or premium tax credits.
An individual browsing the marketplace can easily compare health insurance plans available from both private insurers and employers. Each level – Platinum, Gold, Silver and Bronze – of coverage offers unique benefits to choose from. Platinum plans typically offer higher premiums, while Bronze plans have lower premiums. An individual should consider many factors when selecting their plan; such as family size, income level and family history when making this decision. Individuals who lose coverage due to job changes can still enroll for marketplace health insurance during a special enrollment period that lasts 60 days before and 60 days after losing coverage can still enroll during this special enrollment window.
Subsidies
Obamacare allowed young adults under 26 to remain on their parents’ health insurance plans until age 26 – providing relief for people who didn’t have access to care upon landing their first post-graduation job or for those who did but wanted to avoid purchasing their own plan.
Individuals now have the ability to purchase individual plans through marketplace exchanges (commonly referred to as exchanges) during open enrollment, which runs November 1 – January 15 in most states. Thanks to ARPA and its enhanced subsidy eligibility criteria, more young adults can now obtain plans at significantly reduced costs than before.
Subsidies are available to individuals and families whose incomes fall between 400% of poverty level or have been classified by the marketplace as hardship cases. Subsidies help offset the price of silver plans (the second-least expensive plan available in your area). When enrolling during open enrollment, an insurer will ask you which plan best meets your needs before calculating what your monthly subsidy will be.
Individuals who reach the age limit for dependent coverage and lose their parent’s coverage due to reaching it themselves can elect COBRA or state continuation coverage; they must do this within 60 days of becoming no longer dependent, paying an additional premium for young adult coverage in addition to what was paid through their group plan.
When purchasing plans outside the marketplace, consumers cannot receive premium subsidies; however, they may pay full price throughout the year and then request a refund for some or all advance payments on their taxes return. Furthermore, any excessive premium subsidies they received must be returned when filing their returns.
Out-of-Network Providers
If you’re thinking of keeping your parent’s plan or getting an individual policy, it can be helpful to understand some common health insurance terms. Knowing the distinction between in-network and out-of-network providers could have a big effect on your out of pocket costs.
In-network providers are doctors or health care providers with contracts with your insurance provider that allow them to offer services at a negotiated rate at which plan members can receive care at. Health insurers do this to control and predict costs as well as ensure quality care is delivered. By contrast, out-of-network providers do not have contracts with their respective health plans, which allows them to charge whatever rate they wish – typically more than in-network providers would.
When plan members visit out-of-network doctors, the insurance company calculates what it owes based on a fee schedule (sometimes known as usual and customary fee or reasonable and customary fee ). This fee schedule may be determined either by their health insurer or one of its preferred vendors such as FAIR Health.
Employees need help understanding how their health plans work, so employers often provide resources like websites with provider directories and support teams online to assist. Furthermore, many healthcare providers offer patient support teams who can answer questions and offer guidance.
If your plan does not cover out-of-network care, prior authorization (also referred to as precertification or preauthorization) from your insurer could help ensure they cover charges before receiving services. Although this process can take time and energy, it could ultimately save money down the line.
When making the decision between staying on your parents’ plan or enrolling in a Marketplace plan, it’s essential to consider all aspects. If you do decide to leave them behind, eHealth can assist in finding individual health plans through either Marketplace (if you are 65 or over) or Medicare ( if appropriate). Simply get in touch with us so that one of our trusted health insurance experts can guide you through all your available options.