6 Things to Know About Aging Out of Your Parents’ Health Insurance
The Affordable Care Act allows young adults to avoid high premiums and retain health insurance coverage as a dependent on their parents’ health insurance plans. What age you get the boot and need to insure yourself varies. The ACA states that you lose coverage from your parents’ plans at age 26. Some states, like New Jersey, allow for longer coverage if you’re unmarried and have no dependents yourself. Here’s what to know about growing up and growing into your own medical-meets-financial responsibilities:
Start learning the difference between PPO, HMO, HDHP, and POS. Insurance jargon can be intimidating. Long before it’s time to find a plan of your own, become familiar with these terms so you will fully understand your options. Health maintenance organization (HMO) insurance, for example, will restrict what physicians and hospitals you can utilize but may come at a lower cost; you also won’t be looking at high deductibles. For an individual confident he or she will not need health care services within the next year, a high deductible health plan (HDHP) has lower premiums but coverage won’t kick in until you’ve paid, on average, about $1400 (as an individual) on your own.
As you get closer to age 26, know that getting a job offer will not immediately kick you off your parent’s plan. Beginning in 2014, young adults under age 26 could still choose to stay on a parent’s employer’s health insurance policy even when offered health insurance from their own employers. You also do not have to be living with your parents to fall under their family plan, nor do you have to be a student or be unmarried.
Once you become “of age,” you may have until the end of the month–or the end of the year–to get moving. Depending on the terms of your parent’s health insurance plan, you won’t necessarily lose coverage the day you turn 26. Some policies will require employers to allow you to remain a dependent until the end of the month in which you turned 26. Other plans may cover you until the end of the year.
You can choose a plan outside of Open Enrollment. Typically, enrolling in health insurance is only an option during a specific time of the year. When those weeks are over, enrolling ends, and those left uninsured have to wait until the next Open Enrollment to secure a plan. However, there’s a special enrollment period in health insurance for individuals who are experiencing a “life change” that will affect their insurance plans. This includes marriage, having a baby, or losing a former plan. This means your employer will allow you to enroll no matter what time of year it is, but you want to start the process early. If you do not have a health insurance plan available through an employer, you can choose a marketplace plan. Here, the special enrollment period lasts 120 days–60 days before your birthday and 60 days after. If you’re looking for Marketplace coverage, you may also have some paperwork to fill out to confirm you qualify, so it’s never too early to begin this conversation with your insurance broker or agent.
You don’t want a gap in coverage. If the 120 day window for special enrollment passes and you have failed to secure your own health insurance plan, it could be problematic. You’d find yourself paying in full (no co-pays) and stuck with significant, potentially crushing bills should you have a medical emergency before the next Open Enrollment period.
If you’re at risk of a gap in coverage, ask for COBRA coverage from your parent’s employer. COBRA stands for the Consolidated Omnibus Budget Reconciliation Act and is a way to retain coverage for 36 months past your 26th birthday. However, it requires a written letter of request to your parent’s employer. If your parent works for a very small company with few employees, you may also be eligible for state-based temporary health insurance that can similarly serve as a bridge between one form of coverage and another.