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How long can you stay on your parent’s health insurance?

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8 mins

If you are in your mid-20s and unsure how much longer you can stay on your parent’s health insurance plan, the answer is up to age 26. Under the Affordable Care Act (ACA), you have to get your own health plan after turning 26.

Whether you’re considering your options and looking into getting insurance through your employer, college, the ACA Marketplace, or an individual policy through a private insurer, this article will give you the information you need to know before and after you turn 26 concerning your health insurance coverage.

When do you get kicked off your parent's health insurance?

Up until your 26th birthday, you can stay on your parent’s plan as a dependent even if you:

  • Start or leave school
  • Live with your parents or are out on your own
  • Are no longer claimed by your parents as a tax dependent
  • Get married
  • Have or adopt a child
  • Decline to participate in your employer’s group health plan

Once you turn 26, you’ll be able to stay on your parent’s plan until the end of the month that your birthday falls in. For example, if you were born on October 5th, at midnight on October 31st, you can no longer stay on their plan.

There is one exception — if you live in New York state. In New York, there is a health insurance rider that allows you to stay on your parent’s plan through the end of the year, not the month, that you turn 30. You’ll need to apply for this rider during Open Enrollment after turning 26 and before you turn 29.

To be eligible if you live in New York state, you must be:

  • Unmarried
  • Under age 29
  • Not eligible for comprehensive health insurance through an employer

If you don’t live in New York state, your state of residence might still offer an extension for young adults. Investigate your state’s laws here.

Under the ACA, you qualify for a Special Enrollment period when you age out of a parent’s plan, no matter which state you live in. This allows you to select a health insurance plan outside of the regular Open Enrollment period. Your Special Enrollment period begins 60 days before you lose coverage and ends 60 days after you lose coverage. If you miss this window of time, you’ll have to wait until the next Open Enrollment period to enroll in an ACA plan.

Your options after you age out of your parent’s insurance

When the time comes that you need to find your own coverage, you have a few options about where you can get your plan. These include:

  • Coverage through your employer
  • School-based college if you’re a full-time student
  • The ACA Marketplace in your state
  • Medicaid if your earnings are below a certain threshold
  • CHIP, which is similar to Medicaid if you’re pregnant
  • Individual health insurance purchased independently through an insurance company, like a comprehensive plan or individual policies like critical care insurance, accident insurance, cancer insurance, etc.

Consider a catastrophic health insurance plan

If you’re under age 30, you could be eligible for a “catastrophic health insurance plan.” These plans are designed to protect you in a worst-case scenario situation. With this type of plan, you’ll be carrying a much higher deductible. Still, you’ll have three visits per year with your primary care physician without having to meet your deductible, as well as certain preventive services.

Catastrophic health plans aren’t for everyone. Are there risk factors in your life that may cause you to be more accident or illness prone? Like:

  • Smoking
  • Playing contact sports
  • Riding a motorcycle
  • Having a chronic condition

Any of these can increase the probability that you’ll need medical care that a catastrophic health insurance plan won’t cover until you’ve paid your high deductible.

The HMO option

Other than a catastrophic health plan or a high deductible health plan (HDHP), both of which can leave you with very high out-of-pocket costs until you meet your deductible, you might want to consider an HMO plan.

An HMO (Health Maintenance Organization) plan can have reasonable premiums if you’re willing to accept some restrictions with your plan, such as staying within your provider network and needing a referral from your primary care doctor to see a specialist.

Protect yourself with these coverages

Have you ever heard the term “insurance poor?” Your parents may have used it jokingly about how much they pay in premiums each month for all of the different types of insurance they have.

But, there’s another group of people who are “insurance poor” that isn’t talked about much. This group is “poor because they didn’t have insurance.”

As much as we’d all like to spend those monthly insurance premiums on fun stuff, being a responsible adult means protecting yourself financially first, then budgeting for all of life’s necessities and pleasures.

In addition to health insurance and car insurance, two other types of insurance have to be considered: disability insurance and life insurance. Let’s take a brief look at each.

Disability insurance

Disability income insurance could very well be the most important type of insurance coverage you’ll ever buy because it protects the most valuable asset you have: your future income. Let’s look at the numbers relating to potential losses.

Everyone must have automobile insurance to protect themselves from property damage and personal liability, but the physical asset you’re protecting, your vehicle, is probably worth anywhere between $10,000 and $40,000.

When you're younger, that seems like a lot of money. But compare that potential loss to losing $1 million. You may not have considered it, but you can quite easily earn over $1 million during your lifetime. For example, a 25-year old who makes $25,000 per year for 40 years without ever getting a raise would earn exactly $1 million.

But, what happens if they have become ill or get injured and can’t work? They would lose that $25,000 per year for, potentially, many years. A 5-year disability from an accident, treatment, and recovery would result in $125,000 in lost income for our 25-year old. Is that potential loss worth insuring at the annual cost of 1%-3% of their yearly income?

The easy way to buy disability insurance online & protect your income.

Life insurance

If you’re under 30 and single, you may not think you need life insurance yet. That may be true today (although someone has to pay the $10,000 bill for your funeral and burial), but you will want to own life insurance at some point in your life. Why not buy it now at the lowest price you’ll ever pay for it?

For example, a 25-year old can purchase a $100,000 30-year term life insurance policy for under $25 per month, but 10 years later will pay more than twice that much for the same policy. That adds up to a lot more paid in premiums over the 30-year term if you wait 10 years to buy your life insurance.

The best time to buy life insurance: when you’re young and healthy.

Learn More: Life Insurance for Young Adults

Avoid the temptation to go uninsured

“It won’t happen to me” was the mantra of millions of people who have suffered catastrophic financial loss because they chose not to purchase adequate health, disability, and life insurance.

Realistically — we all know that bad things happen every day to people who woke up that morning without a clue that on that very day, they were going to be diagnosed with cancer, get broadsided 5 miles from their home, or never make it home from work again.

If you haven’t already, take the time today to protect yourself financially; it’s a commitment you’ll never regret making.

Having grown up in upstate New York, Bob Phillips spent over 15 years in the financial services world and has been making freelance writing contributions to blogs and websites since 2007. He resides in North Texas with his wife and Doberman puppy.

The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.

— Published August 9, 2021
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