Under Obamacare (aka Affordable Care Act), dependent children can remain covered under their parent’s health insurance until age 26.1.
After turning 18, they can select their own plan during an exclusive enrollment period.
This article will outline various options available to young adults for obtaining health insurance coverage of their own.
Employer Plans
Most individuals obtain health insurance through their employers. If their plan offers dependent coverage, then children can typically stay on their parent’s plan until age 26 if applicable based on individual plan rules and state regulations – this rule was established under Obamacare. Before Obamacare came into play, insurance companies routinely dropped young adults when they reached a certain age or stopped attending college, leaving more than 30% without health coverage altogether.
The Affordable Care Act (ACA) mandates health plans cover dependents up to age 26, and allows their premium value to be deducted from income. Employers with cafeteria plans must amend their documents accordingly – making it more cost-effective for parents to keep children on their health plan, while helping young adults start off adult lives protected.
Once a dependent child turns 26, their coverage with their parent’s health plan may come to an end, unless another employer or marketplace plan offers coverage. They may be eligible for temporary continued coverage up to 36 months through COBRA; typically this coverage costs the employee their portion plus an administration charge.
Dependent children who wish to enroll in their employer’s plan during open enrollment period have until December to enroll, with coverage starting January 1. New employees must also be eligible to enroll within 90 days of being hired and can do so a few months post hire date.
If a dependent child does not have an employer plan, they should explore Medicaid and the Children’s Health Insurance Program or Health Insurance Marketplace as options. Private coverage through Cigna HealthcareSM* could also provide protection. Regardless of their choice, health coverage is vital as medical expenses can quickly add up; even minor illnesses or injuries from sports activities may quickly incur substantial medical bills.
Individual Plans
Individual health insurance (IHI) is purchased by individuals or families to provide financial relief in the event of medical emergencies. Individual plans typically offer greater flexibility with regard to plan options and benefits compared with group (employer-sponsored) plans, making them typically less expensive options.
The Affordable Care Act mandates most health insurance plans offer dependent coverage up to age 26 for most children of employers with 20 or more employees and those sold on the Marketplace, though there may be exceptions; if an adult child already has coverage through another employer or they do not appear as tax dependents on their parents’ tax returns, the parent can opt to discontinue dependent coverage when their child turns 26.
As soon as a child turns 18 and “ages out” of their parents’ health insurance plan, they have options available to them for purchasing coverage via either COBRA temporary extended coverage for up to 36 months or enrolling themselves directly through the Marketplace during an Open Enrollment Period or Special Enrollment Period that occurs following certain life events.
Individuals and families can utilize the open enrollment period to review all available health insurance options and select one that best meets their needs and budget. This may involve comparing benefits, doctors/hospitals in plan network membership and cost. They can also discover whether they qualify for assistance through Medicaid, Essential Plan or Child Health Plus in paying for health coverage.
Understanding your health insurance options can be tricky, so knowing how long they last is essential. One easy way is to ask your parents whether their policy will still cover you after you turn 26 or whether dependent coverage will cease – this way, you can make an informed decision regarding future healthcare needs.
High-Cost Plans
Under the Affordable Care Act (ACA), children up to 26 years of age can remain on their parents’ health insurance indefinitely provided that financial and non-financial requirements such as enrollment in school and residency have been fulfilled by both parties. When children reach 26, however, it will likely become necessary for them to choose either their own employer plan, marketplace coverage or COBRA plans as possible plans of their own or adult dependents.
As more adults join their parent’s healthcare plans, health care costs can skyrocket quickly – especially for high-cost claimants. Employers and their customers need access to actionable information regarding what drives the highest cost claims; MedInsight Employer Group Insights (EGI) provides this with ease by helping identify specific conditions behind these costly claims while simultaneously combining decades of actuarial expertise from Milliman with data analytics and service type details that enable clients to devise strategies to manage these high-cost claimants more efficiently.
EGI provides health plans and employer customers with an efficient means of understanding which medical conditions are leading to the highest cost claims and their impact on members’ overall health and wellness. Furthermore, its tailored reporting can be calibrated to various definitions of high cost claimants, enabling plans and employers to prioritize efforts that produce effective interventions.
EGI provides healthcare plans with tools to identify members who have crossed certain healthcare spending thresholds, so they can take proactive measures against costly claimants before they spiral out of control. This is particularly useful given that most expensive claimants tend to have at least one chronic condition which causes them to spend more than their peers.
Physical issues aren’t the only ones to contribute to high-cost claimant expenses; mental illness also plays an integral role. About 56% of high-cost claimants have been diagnosed with mental illnesses compared to only 37% for non-high cost claimants; many members with multiple chronic conditions (comorbidity) make up this group of claimants.
Short-Term Plans
Young adults aged 26 or younger have two options when purchasing health coverage: staying on their parents’ plan until 26 or purchasing coverage directly through the Marketplace. Through this online service, shoppers and comparison consumers can shop and compare health plans before making their selection and purchasing one during open enrollment or special enrollment periods. Blue Cross and Blue Shield companies in your locality can assist in helping navigate this marketplace to find an appropriate health plan and enroll you into it.
However, it’s essential to recognize that not all plans are equal and may not provide optimal coverage for individuals with preexisting conditions. You should review each plan detail closely in order to make sure you’re receiving what’s necessary from it.
Unfortunately, many short-term plans fail to comply with Affordable Care Act requirements and therefore don’t cover specific types of care or services, like maternity, mental health and prescription drug coverage. It’s essential that you’re aware of this so you don’t find yourself paying out-of-pocket costs for something your plan should have covered instead of incurring out-of-pocket expenses for it.
Purchasing a short-term plan should not be done lightly; such plans tend to offer higher deductibles, copays and coinsurance than traditional medical plans and may only be available in specific states and locations and cannot be renewed.
Young adults without employer plans or who have aged off their parent’s plan might find short-term coverage suitable until longer-term plans become available, or until a job with more attractive benefits becomes available.
The Affordable Care Act allowed young adults under 26 to stay on their parent’s health insurance until age 26 as an advantage when transitioning into independent health coverage, yet this doesn’t always lead to optimal results.
