Losing Parental Insurance at 26
Turning 26 is a major milestone in life. For many young adults, it also marks the end of health insurance coverage under a parent’s health plan.
The Affordable Care Act (ACA) allows young adults to remain covered by a parent’s plan until age 26. This provision has enabled millions of young people to retain health coverage even if they do not have a job that provides insurance.
However, once an individual turns 26, they can no longer remain on their parent’s health plan (unless they qualify due to disability). This means young adults must obtain their own insurance after turning 26 to avoid being uninsured.
Losing coverage under a parent’s plan often comes as a shock to young adults who have become accustomed to insurance coverage their entire lives. They now face the task of signing up for their own plan, comparing options, understanding costs and coverage details, and budgeting for much higher healthcare expenses.
This transition at 26 provides an important opportunity for young adults to take control of their healthcare and make informed choices about health insurance. With some preparation and understanding of the options, the shift to getting one’s own insurance does not need to be overly intimidating or burdensome.
Effects of ACA
The Affordable Care Act (ACA) has had a significant impact on healthcare coverage for young adults aged 19-25. One of the most well-known ACA provisions is allowing young adults to stay on their parents’ health insurance plan until age 26.
Prior to the ACA, young adults were often kicked off their parents’ plans when they graduated from college or turned 19. This resulted in a high uninsured rate for this age group, with 30% of young adults lacking health insurance in 2010 according to a Commonwealth Fund study.
The ACA mandate allowing young adults to remain covered by their parents’ plan until turning 26 led to large increases in insurance coverage. By 2011 after the ACA provision took effect, the uninsured rate for young adults dropped to 21%. By 2016, it had further declined to around 13%.
Staying on a parents’ plan until 26 provides a valuable bridge and safety net for young adults first entering the workforce. This provision remains widely popular and has extended coverage options to millions of young people.
Options after Losing Coverage
When young adults lose their parents’ health insurance coverage at age 26, they have a few options to consider for maintaining health coverage:
Get Insurance Through Your Own Employer
Many young adults begin full-time jobs after college that provide employer-sponsored health insurance. Review your company’s benefits package to see if they offer health insurance, what plans are available, and how much the premiums will cost. Employer insurance often costs less than individual plans on the marketplace.
Sign Up for a Marketplace Plan
Losing your parents’ insurance qualifies you for a Special Enrollment Period on the health insurance marketplace. You have 60 days after your 26th birthday to enroll in a marketplace plan. These plans cannot deny you coverage or charge you more due to preexisting conditions. Shop and compare plans during open enrollment each year.
Stay on COBRA Temporarily
You can elect COBRA coverage to remain on your parents’ health insurance temporarily. This extends your parents’ plan for 18-36 months, but you must pay the full premium cost. COBRA can be very expensive, but may make sense as a short-term option to avoid gaps in coverage.
Having continuous health insurance is important to avoid penalties and gaps in care. Consider all your options to find an affordable plan that meets your healthcare needs.
Considerations for Marketplace Plans
When you turn 26 and lose coverage under your parent’s health insurance plan, one option is to enroll in a health insurance plan through the Health Insurance Marketplace. Here are some key considerations when exploring Marketplace plans:
Income Requirements
To qualify for Marketplace coverage and subsidies, your income must fall within a certain range based on the federal poverty level. For 2022, you can qualify for subsidies if your income is between 100-400% of the federal poverty level. This works out to an income between about $13,000 to $54,000 for an individual. Those who make less than around $13,000 may qualify for Medicaid depending on their state.
Comparing Plan Types
There are four tiers of Marketplace plans: Bronze, Silver, Gold,, and Platinum. Bronze plans have the lowest monthly premiums but the highest out-of-pocket costs when you receive care. On the other end, Platinum plans have the highest premiums but lower deductibles and copays.
Silver plans offer a balance – moderate premiums and moderate deductibles and copays. Most consumers choose Silver plans, especially those who qualify for cost-sharing reductions, which lower the out-of-pocket costs on Silver plans.
Tax Credits and Subsidies
Most consumers who buy insurance through the Marketplace qualify for tax credits which can lower your monthly premium payments. The amount of the tax credit is based on your income level and the cost of the Silver plan in your area.
In addition to tax credits, those with incomes up to 250% of poverty level may qualify for extra savings like lower deductibles or copays. This means an individual making around $33,000 or less per year.
Understanding the subsidies and tax credits available is key to finding an affordable Marketplace plan option after losing your parent’s insurance. Consulting with a navigator can help ensure you find the optimal plan based on your financial situation and expected healthcare needs.
COBRA Drawbacks
COBRA (Consolidated Omnibus Budget Reconciliation Act) allows you to continue your employer health insurance coverage for a limited time after losing a job. However, COBRA has some significant drawbacks to consider:
- Only temporary coverage – COBRA is not a permanent solution. It lasts a maximum of 36 months, though you may choose to end it sooner. This means you’ll need new insurance after COBRA ends.
- More expensive premiums – With COBRA, you pay the full cost of premiums yourself. Previously, your employer likely covered a large share. Premiums are typically high, often $500 or more per month for an individual.
- Limited enrollment period – You have just 60 days after losing employer coverage to enroll in COBRA. Miss this window and you lose your eligibility. So you need to act fast.
Overall, COBRA can provide a short-term patch but is not a long-term solution. It buys some time, but you’ll need to transition to a new plan once COBRA expires. The high costs make it difficult to sustain for the full 36 months as well. So it’s wise to explore your options and be prepared for when COBRA ends.
Impact on Healthcare Use
Turning 26 can lead to major changes in healthcare utilization patterns. Without insurance, many young adults may delay or skip preventative care or doctor’s visits due to high costs. This comes at an important time, as those in their mid to late 20s should prioritize preventative screenings and annual physicals to establish healthy habits and stay on top of any emerging issues.[1]
According to a 2019 Commonwealth Fund report, uninsured rates for 19-34 year olds increased from over 15% to over 21% after turning 26 and losing parental coverage.[2] Uninsured young adults are much less likely to have a primary care doctor or get recommended preventative care like cancer screenings, dental visits, or flu shots. This puts them at higher risk for undetected illnesses or conditions.
Major organizations like the American Cancer Society and US Preventative Services Task Force recommend screenings for breast, cervical, colon, and skin cancers starting in one’s 20s and continuing through middle age.[3] Catching problems early greatly improves outcomes. Without insurance, these vital services can cost hundreds of dollars out of pocket.
Likewise, reproductive health screenings and services are important for family planning and detecting issues like STDs or infertility. Young women should receive pelvic exams, pap smears, and contraceptive counseling. Cost and lack of access to a gynecologist are common barriers.
Amidst this healthcare uncertainty, it’s crucial to prioritize recommended care based on age, gender, risk factors, and family history. Free and low-cost community clinics can provide primary and preventative services on a sliding scale. Using tax-advantaged HSAs or negotiating self-pay rates with providers are other potential options. Good health is an investment, so exploring ways to stay up to date on care after 26 protects wellbeing over the long run.
Budgeting for New Expenses
Turning 26 can bring about a major shift in healthcare expenses. When you lose your parents’ insurance coverage, you become responsible for the full cost of your medical care. This includes monthly premiums to have insurance, as well as any deductibles, copays or coinsurance required when receiving care.
The cost varies dramatically depending on what type of plan you select. If you choose a low deductible plan on the marketplace, your premiums will be higher, likely $150-400 per month. However, you’ll pay less out of pocket when you need care. High deductible health plans have lower premiums, often $50-150 per month, but you’ll pay more upfront for services until you hit your deductible. Most plans will also have additional costs like copays for doctor visits or prescriptions.
When budgeting for a new health plan, first look at the total premiums for a full year and ensure you can afford that added expense. Next, factor in potential out of pocket costs based on your expected healthcare usage. If you regularly see specialists or have prescriptions, a higher premium plan could save you money overall. If you are generally healthy, a lower premium option may be possible. Also look for ways to lower costs if needed, like choosing generic drugs, negotiating bills, or utilizing preventive services covered at no cost.
With some planning, you can find an affordable health insurance option after getting dropped from your parents’ coverage. Evaluate your budget, healthcare needs and the plan offerings in your state to choose the best solution. This will help you secure health coverage and smoothly transition to managing costs independently.
Shopping for New Doctors
One important step when transitioning off a parent’s insurance plan is to find new in-network doctors and transfer medical records. This will ensure continuity of care and help avoid large out-of-network bills.
Start by checking which providers are in your new insurance network. Logging into your insurance account website is the best way to search for in-network doctors and hospitals in your area. Compare their specialties and locations to find good matches with your current providers.
If your current primary care doctor or specialists are not in-network with your new insurance, you’ll want to find replacements covered under your new plan. Make sure any doctor you choose is accepting new patients as well. Prioritize finding a new primary care provider first, as they can help refer you to in-network specialists.
Don’t forget to request copies of your medical records from your previous providers. These contain your health history, test results, prescriptions, and more. Medical records are crucial for continuity of care with new doctors. Most providers charge a small records fee, but records should be delivered within 30 days of request.
Shopping for new in-network providers and transferring records will make the transition much smoother when losing a parent’s insurance plan at 26. Taking time for this important step will prevent gaps in care.
Understanding Plan Coverage
One of the most important things to understand when selecting a new health insurance plan is what is covered and what is excluded. Every plan will be different, so it’s essential to read through the plan documents carefully.
When reviewing a plan’s covered services, look for things like:
- Doctor visits
- Hospital stays
- Preventive services like annual checkups
- Prescription drug coverage
- Mental health services
- Maternity care
- Rehabilitative services like physical therapy
Also pay close attention to the out-of-pocket costs associated with these services, like copays, deductibles, and coinsurance rates. These costs can vary widely between plans.
In addition to covered services, also look closely at what is excluded or not covered. Some plans may not cover certain types of care like dental or vision. Make sure you understand any significant exclusions.
Importantly, check to see if your prescription medications are included in the plan’s formulary. The formulary is the list of drugs the plan covers. You’ll typically pay more for drugs not on the formulary. You may need to switch medications if your drugs aren’t covered.
Thoroughly examining a plan’s coverage details takes time but is hugely important. It helps avoid unexpected costs down the road and ensures you can access the healthcare services you need. Understanding what’s covered before making a plan selection is vital to picking the right coverage after losing your parent’s insurance.
Next Steps
When you turn 26, it’s important to act quickly to get new health insurance in place. Here are some key next steps to take:
- Meet enrollment deadlines. If you’re enrolling in a marketplace plan, make sure to select your plan by the enrollment deadline. These deadlines are typically in mid to late December for coverage starting January 1. Missing the deadline could leave you uninsured for a period.
- Consider supplemental plans like dental. Many medical plans don’t include dental coverage. Look into adding a separate dental plan to cover services like cleanings, x-rays, and more. This can help you save on dental care.
- Get preventative care. Under the ACA, most plans must provide certain preventative services like immunizations, cancer screenings, and annual checkups at no cost to you. Take advantage of this by scheduling well visits and health screenings. Staying on top of preventative care now will pay off in the long run.
Losing your parent’s health insurance opens up new healthcare responsibilities. But by taking proactive steps like these, you can secure comprehensive coverage and continue accessing the care you need. Act quickly when looking for a new plan, and use any available resources like online exchanges or a broker to find the right fit.