Q. I know that in 2010 ACA started allowing young adults to maintain their parents' health insurance until they are 26 years old. Has something changed in the rule? Is it better to stay on my parents' plan or get my plan? When I turn 26, what options are available?
A. Nothing has changed, except that Grandpa's group plans must now allow adult children to remain covered up to the age of 26 regardless of whether they have coverage from other employers. Before 2014, plans for groups of grandparents could refuse to cover young dependent parents if they had access to coverage from other employers, but that is no longer the case.
Allowing young adults to take out parental insurance adds an additional coverage option for people early in their careers. But that doesn't mean staying in a parent's healthcare plan is always the best choice.
ACA does not require small group health plans to offer employee coverage, although most of them do. Large group plans must offer coverage to full-time employees and their dependents in order to comply with the mandate of the ACA employer. Plans that offer employee coverage must allow adult children to remain in a parent's plan for up to 26 years, regardless of whether the young adult lives with the parent, is financially dependent on the parent, has other coverage options, or one student or is married. (However, coverage should not extend to the spouse or dependent children.)
If a family has minor children and even young children under the age of 26 – and if their premium is a family rate regardless of the number of children in the plan – it probably makes sense to keep young adult members on politics until they are old 26 years old, unless the young adult lives in a different area where the family plan has no network provider.
But if the only dependents of the plan are young adults or if the reward is based on the number of dependents, there are other considerations to consider. Some employers only contribute to employee coverage, with premium deductions for fully employee employees. In this case, the total cost of insuring a family may be lower if young adults get their coverage in the individual market.
This is especially true of young adults with relatively low incomes who qualify for an exchange grant. If your parents do not claim you as an employee on their tax return, you can apply for a policy in the exchange with eligibility for the grant based solely on your income. If your parents claim you as an employee, eligibility for the grant is based on the income of the whole family (here's another FAQ that explains how premium benefits are calculated in situations like this).
If you don't live in the same area as your parents, it may make more sense to purchase your policy, as the network of suppliers for your parents' plan may be limited in your area. And although maternity coverage is now included on all plans, it is not required for dependents. Getting your policy guarantees that you will have maternity coverage. If you are not yet 26 and still have coverage on your parents' plan, you can purchase your plan during the annual open enrollment period or if a valid event occurs, such as moving to a new area. You can also sign up for your employer's plan if that option becomes available to you.
Losing the coverage of a parent's plan when he turns 26 is a valid event that triggers a special open enrollment period for individual health insurance or enrollment in a group plan through the employer, if you are eligible. Your parents' plan may only cover you until the end of the month in which you will turn 26, or they may extend coverage until the end of the year you will turn 26, so double check the plan to make sure you understand when the coverage will end. You have 60 days before and after that date to sign up for a new individual plan (or 30 days to sign up for your employer's group plan). And the special enrollment period that allows you to sign up for a plan in the individual market applies even if you have the option to extend coverage under your parents' plan using COBRA.
You can shop on-exchange or off-exchange: the special open registration window applies both ways. If you sign up during the 60 days prior to the loss of coverage, your new plan will be effective the first of the following month after the end of the old plan, which generally allows for seamless coverage (the normal rules that require that a person subscribes to the 15th of the month to make the coverage effective the first of the following month does not apply if you register due to the loss of coverage and you register before the old plan ends; if you register within 60 days after the loss of coverage, your new plan will take effect the first or second month after the application, which means you will have some space in the coverage). If your income is less than 400% of the poverty level of the previous year, you could benefit from tax credits that pay a part of your premiums if you shop on the stock exchange (you may not qualify, even with an income at that level, since it also depends on the unsubsidized cost of the coverage; here is another FAQ that explains this in more detail). There are also exchange policies available with lower cost sharing requirements if your income does not exceed 250 percent of the poverty level.
Individual catastrophic plans are available for applicants under the age of 30, with prizes that are generally lower than the bronze plans. But premium subsidies aren't available on catastrophic plans, so a "metal" plan is probably a better choice if your income makes you eligible for a premium subsidy.
Medicaid is also an option if you are eligible. In states that have expanded Medicaid, you can qualify as a single person with an income of around $ 17,600 in 2020.
If your parents' policy qualifies for the continuation of COBRA, you can elect COBRA for up to 36 months after coverage has aged to 26 years. But you will be responsible for the full cost of the coverage, plus an administrative fee of up to 2 percent. In many cases, there are less expensive options available in the individual market. And as noted above, the option to purchase your plan during a special membership period triggered by the loss of coverage is available even if you also have the option to extend the plan with COBRA.
The impact of ACA
In September 2015, HHS released data related to changes in insurance coverage between various demographics in the years before and after ACA implementation. Determining exactly how many young adults have remained in their parents' health plans is a challenge, but we know from HHS data that coverage among young adults (19-25 years) has increased by 5.5 million people from 2010 to September 2015.
Almost half of this gain (2.3 million people) occurred between 2010 and October 2013, before most of the ACA reforms (trade, guaranteed emission coverage, award grants, etc.). So a good portion of those 2.3 million young adults are likely to have gotten coverage through a parent's plan. Since then, the increase has probably been a combination of young adults who remained in their parents' health plans and young adults who purchased their plans in the exchanges.
Louise Norris is an individual insurance broker who has been writing on health insurance and health care reform since 2006. He has written dozens of opinions and educational articles on the Affordable Care Act for healthinsurance.org. Its updates on the state's health exchange are regularly cited in the media covering health care reform and other health insurance experts.