26 and Getting Kicked Off Parent's Health Insurance. What Now?

Health Insurance Options for Young Adults Aging Out of a Parent's Plan

Health insurance helps patients get the medical care they require
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If you’re approaching 26 years old, you may find yourself in a health insurance bind. Your parents can't cover you under their health plan once you turn 26. Yet, at 26 years old, many young adults don’t have a stable career with a benefited full-time job providing health insurance.

If this is your situation, you have several options for getting health insurance coverage when you turn 26 years old.

Buy a Plan on Your Health Insurance Exchange

You can buy health insurance on your state’s health insurance exchange.

If you have a modest income, you may even qualify for a government subsidy to help pay the monthly premiums. For a single individual, subsidy eligibility extends up to an income of $47,520 in 2017, but in some areas, premiums are low enough that subsidy eligibility stops at a lower income threshold. You'll need to use the exchange's quoting tool to see the exact prices in your area based on your income.

Affordable Care Act health insurance exchanges don’t allow you to enroll in health insurance any time you choose. Generally, you’re only allowed to enroll during the open enrollment period that happens each autumn.

However, since you’re losing your current health insurance coverage due to aging out of your parent’s plan, you’ll qualify for a special enrollment period when you turn 26. This will give you 60 days before your plan ends—as well as 60 days after it ends—to enroll in a health plan on the exchange even if it’s not open enrollment.

If you miss this short special enrollment window, you’ll have to wait until the next open enrollment period to buy health insurance on your state’s health insurance exchange.

Note that the special enrollment period in this case also applies outside the exchange, but subsidies aren't available outside the exchange, so that's not an option you should use if your income makes you subsidy-eligible.

COBRA Continuation Coverage

COBRA is a law that allows you to continue your current health insurance coverage for 18-36 months after you've aged out of your parent's health plan, lost your job, or gotten divorced. Not all health plans have to offer COBRA continuation coverage, though. Learn if your health plan has to offer you COBRA.

Here’s how COBRA works. You or your parents notify the health plan that you’ll be losing coverage due to losing your dependent status. The health plan then sends you information explaining how to continue your coverage. You’ll have 60 days to choose to continue your coverage through COBRA. If you don’t make that choice during those 60 days, you’ll lose your chance forever.

You’ll have to pay monthly premiums for your COBRA coverage, and it might cost a lot. Right now, your parent has part (or in some cases, all) of the monthly premium taken out of his or her paycheck. But a portion of the premium is likely being covered by your parent's employer (although some organizations require employees to cover the full cost of adding dependents to the plan).

When you take COBRA coverage, your parent’s employer doesn't contribute toward the premium for your coverage anymore. You have to pay both the part your parent was paying and the part your parent’s employer was paying. In addition, you’ll have to pay a 2% administrative fee.

You pay monthly COBRA premiums for as long as your COBRA coverage lasts, usually 18 months. If you miss a COBRA premium payment, your COBRA coverage ends and you can’t reinstate it. If you get other coverage, you can cancel your COBRA coverage whenever you'd like. But if you take COBRA, you no longer have access to a special enrollment period in the individual market (through the exchange or off-exchange).

Learn more about COBRA continuation coverage from the Department of Labor in “An Employee’s Guide to Health Benefits Under COBRA.”

Health Insurance Through Your Job

If you’re working and your employer offers health insurance, you may become eligible for that health insurance when you lose your current insurance. If you don’t think you can sign up for your workplace health insurance because it’s not open enrollment time, think again. Losing your parent’s coverage will likely make you eligible for a special enrollment period at your workplace, assuming you're otherwise eligible for coverage under your employer's plan. You’ll have 30-60 days to sign up.

Just because you get a job doesn’t mean that you’ll automatically qualify for health insurance through your workplace. For example, many employers require you work a minimum number of work-hours per week to be eligible for health insurance. You’ll have to meet that requirement before you’ll be eligible to sign up, even with a special enrollment period.

Even if you're eligible, job-based health insurance isn’t usually free. Your employer will take your share of the cost of the monthly premiums out of your paycheck, so expect smaller paychecks. That said, at least your employer is shouldering part of the cost of your health insurance premiums. With COBRA, you're paying the entire premium yourself. And if you enroll in a plan through the exchange but your income is too high to be subsidy-eligible, you'd also be paying the full premium yourself.

Medicaid

If your income is low, you may be eligible for Medicaid, a joint state/federal social welfare program that provides health insurance to certain disadvantaged or low-income residents. You must be a legal resident of the state in which you're applying for coverage, and Medicaid doesn’t usually offer coverage for lawfully present immigrants until they've been in the U.S. for five years.

Within certain guidelines, each state sets its own rules as to who qualifies for Medicaid and who doesn’t.  If your income is 138% of federal poverty level or lower, you’ll qualify for Medicaid in 31 states and the District of Columbia. In the remaining states, qualifying for Medicaid is more difficult and limited to vulnerable populations such as pregnant women, the disabled, the blind, or the elderly (note that although Wisconsin is among the states that has not expanded Medicaid under the ACA, they do not have a coverage gap; low-income Wisconsin residents qualify for Medicaid or a premium subsidy in the exchange, depending on their income).

Premiums, deductibles, copays, and coinsurance are usually very small when you have Medicaid. In fact, some Medicaid programs don’t charge any premiums or cost-sharing at all.

Learn more about how Medicaid works in your state by selecting your state on this interactive map.

Student Health

If you’re in college, you may be eligible for student health insurance through your university. Some universities require you to take a certain minimum class load to be eligible. Check the specifics of the coverage to make sure it’s adequate, including the coverage when you’ll be on vacation and perhaps out of town for long periods of time.

Alumni Association, Trade Association, & Other Options

Not eligible for student health because you’re not a student anymore? Some alumni associations offer health insurance to their members. Check with your university’s alumni association.

Self-employed? Check with your trade association if you’re a member of a trade. Check with your local chamber of commerce if you have your own small business. Some of these organizations offer group health plans to their members. Additionally, small businesses can buy health insurance through their state's SHOP health insurance exchanges.

As Affordable Care Act health insurance exchanges and SHOP exchanges become more established and provide increasing options, fewer trade and alumni associations may offer health insurance.

You can explore other young-adult health insurance options using an independent health insurance broker licensed by your state. These folks are experts in helping people pick a quality health plan that fits their needs. Your best bet is to use a broker who is certified by the exchange in your state, so that you can see options both on and off the exchange and ensure that you're getting the coverage that's best for your situation.

Updated by Louise Norris.

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