I'm 24. Should I stay on my parents' health plan, or get my own?

Should I stay on my parents' health insurance or get my own plan?
You've finished school and found your own place. Should you stay on your parents' health insurance?. Digital Vision/Getty Images

Young adults: one of the first groups helped by the ACA

Young adults have historically been much more likely to be uninsured when compared with children and older adults. In early 2010, a CDC study found that the overall uninsured rate in the US was 15.4%. But for people age 18 to 24, it was 31.4% - more than double the national average. People age 25 to 34 were doing only slightly better, with a 28.2% uninsured rate.

To tackle this issue, one of the first changes under the ACA was the provision that young adults could remain covered on their parents' health insurance until they turned 26. This went into effect for plan years beginning on or after September 23, 2010 - more than three years before premium subsidies and guaranteed-issue coverage changed the landscape of the individual market.

And it worked. The number of young adults (19 - 25) with health insurance grew by 5.5 million from 2010 through September 2015. And 2.3 million of them got coverage before the exchanges opened for business in October 2013, mostly as a result of being able to remain on their parents' health plan.

Regulation applies to all plans that offer dependent coverage

Prior to 2014, grandfathered plans only had to offer coverage to young adult dependents if they didn't have access to a plan through their own employers. But now, even grandfathered plans have to allow dependents to remain on a parent's plan, regardless of whether they have other options available.

Under the ACA, small group plans (fewer than 50 full-time equivalent employees) aren't required to offer health insurance at all, and they aren't required to offer coverage to dependents. But if they do (and most of them do), they're required to allow dependents to remain on the plan until they turn 26.

Large group plans (50 or more full-time equivalent employees) are required to offer health insurance to their full-time employees, along with their dependents, in order to be in compliance with the ACA’s employer mandate.

You can stay on your parents' plan until you turn 26

If your parents' have a health insurance plan that offers coverage to dependents, you're eligible to be covered by it until you turn 26. This applies regardless of whether you live with them, are claimed as a dependent on their tax return, are in school, have access to your own employer's plan, or are married. 

But that doesn't mean that staying on your parents' plan will be the best option. Here are some considerations to keep in mind:

Does it change your parents' premium to have you on the plan?

If your family's health plan is billed at the "family" rate regardless of how many dependents are on the plan, and if you have younger siblings who will remain on the plan regardless of whether you do or not, it might make sense for you to stay on the plan.

The premium your parents pay would still be the "family" rate even if you carved yourself off the plan and got your own coverage. 

Or if your parents are among the very lucky few whose employers pay their entire premium in full, including dependent coverage, your coverage through their plan is essentially free until you turn 26.

But if removing yourself from your parents' plan would lower the premiums that are payroll deducted from your parents' paychecks, you'll want to crunch the numbers with your parents and see how much they'd save if you dropped off their employer-sponsored plan and got your own individual coverage.

How much would it cost to get your own plan?

You can stay on your parents' plan until you turn 26, even if they no longer claim you as a dependent on their tax return.  But if you file your own taxes and have a relatively low income, you may qualify for a significant tax credit to offset the cost in the exchange in your state.

If your parents still claim you as a tax dependent, your application for coverage through the exchange would include their income as well as yours, although your household size (for percentage of poverty level calculations) would include everyone on your parents' tax return.

Catastrophic individual plans can be purchased in the individual market (on or off-exchange) by applicants under age 30, and the premiums are a little less than bronze plan rates. But subsidies aren't available on catastrophic plans, which means they probably aren't the best option if your income makes you subsidy-eligible.

If your income is under 138% of the poverty level (a little over $16,000/year for a single individual), you may qualify for Medicaid, depending on whether your state has accepted federal funding to expand Medicaid under the ACA. 

Do you live near your parents?

If you remain on your parents' plan but don't live near them, you may find that you don't have access to in-network doctors in your area. Depending on what type of plan they have (ie, HMO, PPO, EPO, POS), you may or may not have coverage for out-of-network providers in a different area. Even if you do, it will cost more than it would to see an in-network provider.

Getting your own plan might make the most sense if you live far away from your parents.

Do you want maternity coverage?

Maternity coverage has been included on group plans with 15 or more employees since 1978. Thanks to the ACA, it's now included on all individual and small group plans as well, including maternity coverage for dependents. 

But large group plans (50+ employees) are not required to cover maternity care for dependents, other than prenatal care (ie, labor and delivery do not have to be covered for dependents on large group plans).

You can check with your parents' plan to see if it includes maternity coverage for dependents. If it doesn't, you may want to get your own plan (through your own employer, in the individual market, or Medicaid if you're eligible) to ensure that you have maternity coverage.

Are you married?

You're still eligible to be on your parents' plan until you turn 26, regardless of whether you're married or not. But the plan does not have to extend coverage to your spouse or kids. It's up to you whether you want to be on the same plan with your spouse, but doing so will require you to come off your parents' plan.

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