As per federal law, most parents’ health insurance plans can cover their children up until 26 years old; some states may have different restrictions in place.
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Coverage Year
Under current federal law, you are eligible to remain on your parents’ health care plan until your 26th birthday (some states allow longer). When it comes time to transition off of this coverage however, it is essential that you understand all your options; staying with their plan may not be in your best interests if you move cities/states where the network does not cover you adequately.
Before making a coverage decision, it is essential that you fully understand the terms of your parents’ group health insurance plan as well as state laws on dependent insurance. Most plans provide an age limit as well as an agreed-upon deadline by which you must make your choice.
Typically, parent plans must allow for dependent children under 26 to remain covered until age 26, though this varies based on specific plan requirements and state laws. It’s also important to be mindful of any tax implications should your coverage continue under your parent’s plan.
As soon as a young adult “ages out,” they may qualify to purchase temporary extended health coverage under either COBRA or the New Jersey Small Group Continuation or Dependent Under 31 Law (DU31). Coverage elections under either of these laws must begin no later than 60 days before turning 26.
Young adults may use their own funds to purchase health coverage through the Affordable Care Act marketplace between November 1 and January 15 in most states, during the annual Open Enrollment period (Nov 1 through Jan 15 in most cases). Becoming 26 and losing parental coverage constitutes a qualifying life event allowing immediate enrollment without needing to wait for Open Enrollment Period.
Additionally, in addition to these private sources of health insurance, you could qualify for low cost or free coverage through the Affordable Care Act marketplace, which offers comprehensive health coverage at reduced rates. Unfortunately, the ACA marketplace only makes plans available to individuals who do not currently receive health insurance through employment or another source.
Open Enrollment
Law allows young adults to remain on their parents’ insurance as dependents until age 26; however, each plan may have specific rules and restrictions in place for this option. If your parents have a marketplace plan allowing dependents to be elected onto it, usually until December 31 of the year in which you turn 26; you should check with their individual plan or your state health insurance marketplace to see more about your options.
As you near age 26, it’s wise to set aside time to research full-coverage Affordable Care Act plans (ACA), other available plans (such as lower cost short-term medical insurance if your state permits), and options ( such as short-term medical coverage if allowed by your state). Doing this early will make aging out from under your parents’ plan easier if open enrollment comes around again and apply for new coverage during open enrollment period.
Open enrollment is the one time each year when most individuals can enroll in or modify an individual marketplace/exchange plan or make any necessary adjustments to an existing one. However, life events (like losing your job or getting married ) may allow individuals to enroll outside of this period and enroll.
If you currently have a Marketplace/Exchange plan and lose coverage due to turning 26, you can enroll in another plan during the 60 days preceding your loss of coverage or use this special enrollment window if you prefer purchasing off-exchange plans.
If you purchase a plan during this special open enrollment, your new coverage will go into effect the first of the month following your application. Keep in mind that most options available both through the Affordable Care Act Marketplace (ACA marketplace) and off-exchange are similar, although certain insurers do not participate. Getting insurance directly from a private insurer may also be possible although most do not provide enrollment windows like those found within ACA marketplace/exchange plans do.
Age Limit
Dependents covered under their parent’s health plan have an age limit depending on both their specific plan and your state’s regulations. Most plans drop dependents once they reach 26; however, prior to Obamacare being passed many young adults would lose coverage earlier due to no longer being full-time students or finding work and no longer qualifying for their parents’ plan.
If you have a family plan through your employer or group health insurance from your parents’ workplace, they should provide written notice of your eligibility to select COBRA coverage within 60 days of when you would otherwise become ineligible for it. COBRA offers temporary extended health coverage of up to 36 months at an additional monthly premium cost that you or they are responsible for paying.
New Jersey small group employers and those covered under the Affordable Care Act marketplace also have the option of providing young adults coverage through their existing group health benefit plans for up to 31 months if they meet all of the requirements of DU31. In order to be eligible, young adults must have been qualified dependents under an existing small group insurance plan, fulfill all DU31 criteria, and not be married or in a civil union at time of eligibility.
Individuals aged 25 or 26 who do not yet meet eligibility can still purchase individual market health plans, and may be eligible for tax credits on the marketplace if their annual earnings fall under $50K. Young adults should explore all available health insurance plans on the market to find one that meets their needs, which may be both affordable and comprehensive. For more information, visit eHealth’s Marketplace Resource Guide and speak to a licensed insurance agent to compare marketplace health plans. If you cannot find an affordable health plan on the marketplace, Medicaid may be an option in your state marketplace; visit their eligibility page to determine this.
Special Enrollment
Turning 26 can be a life-altering milestone as it often means losing parental health insurance coverage, yet at the same time opening up opportunities to enroll in your individual marketplace plan prior to open enrollment (November 1- January 15 in most states) taking place next year. However, this special enrollment window only applies for individuals purchasing coverage independently rather than through employers or Medicare.
Enrolling during a special enrollment period can be done either on or off-exchange, with certain rules you must abide by in either case. For instance, when purchasing individual market coverage from private insurers they often impose strict documentation requirements, so make sure you can confirm you have experienced a qualifying life event and meet other eligibility requirements before purchasing an individual market policy from them.
Utilizing a marketplace plan typically makes the process less daunting. While you still must fulfill eligibility requirements, signing up during any special enrollment periods that occur between 30 days before and 60 days after your parent’s coverage ends is usually much simpler.
State laws determine exactly which life events qualify as qualifying life events, with most accepting things like getting married, having a baby, getting divorced and changing employment or losing it as qualifying events. Other events that may trigger special enrollment include being named an heir in a will, changing domestic partnership status or moving homes as well as joining an Alaska Native Claims Settlement Act Corporation shareholder tribe or joining one and becoming an Alaska Native Claims Settlement Act Corporation shareholder; becoming U.S. citizens or starting or ending incarceration among others.
No matter how convenient it may be for you to stay on your parents’ health insurance, sometimes it just doesn’t make sense for you to. Your needs can change as you age and you may require something better suited to your circumstances and budget. In either event, special enrollment period offers you an excellent chance to find one that will serve both.