One of the key provisions of the 2010 Affordable Care Act (ACA) legislation allows young adults to remain on their parents’ employer-sponsored or open market health insurance plans until they reach the age of 26. This has been so helpful for those who work for companies that do not offer health insurance, who are continuing their education, starting a business, or taking time to travel.
In addition to guiding these young adults through the process of enrolling in their own health insurance, our goal is to give them the knowledge and skills necessary to make informed health insurance decisions throughout their lives.
Planning should begin several months prior to turning 26 as there are several important steps necessary:
#1. Determine your current policy’s last date of coverage.
This gives you a “target date” for when your new coverage must begin.
If you are insured as part of a family plan purchased through the Marketplace, you may remain covered until December 31st following your 26th birthday. (Some states allow a child to remain even longer, so check yours for specific regulations.)
If you are insured as a part of a family health insurance plan through your parent’s employer, coverage typically ends on the last day of the month in which you turn 26. But this can vary by company, so contact the company’s Human Resources department to get a definitive answer.
#2. Consider all available options.
There are many! These may include:
- A plan offered by your own employer
- COBRA (a continuation of your current policy from your parent’s employer)
- An individual plan purchased through the Marketplace (you may qualify for savings, based on your own income)
- An individual plan purchased directly from an insurance company (not available in all states)
- Medicaid, if eligible
- If attending University, there may be affordable health insurance policies available through the school
- Catastrophic/Major Medical Insurance
- Travel Health Insurance for a young person who may be traveling or living abroad
#3. Conduct an analysis of identified options.
A few suggestions…
Consider your health status. A 26-year-old with chronic medical conditions who routinely takes prescription medications will need a different plan than one without a significant health history.
Further, each insurance plan has its own drug formulary (list of covered medications) and provider directory (list of physicians and hospitals that are “in-network” providers). You want to ensure the drugs and specialists you need are covered in whatever plan you choose.
Consider monthly premium costs. These vary tremendously, again, based on the type and degree of coverage. More is not necessarily better if you are paying for coverage you likely won’t need. Similarly, simply selecting the cheapest monthly option — without taking into account your health status — can leave you underinsured.
Consider more than just premium costs. These alone don’t tell the whole story — you need to understand what your costs will be as you access care. For example, some plans may have a deductible that must be met before any payment is made by the insurer. Other plans have co-payments based on the type of service you receive. Additionally, plans have different out-of-pocket maximums that reflect the maximum cost you would have to pay should you need to access a lot of care during the year.
#4. Complete your new enrollment and pay your plan premiums.
When you “age out” of family health plan coverage, you are eligible for a Special Enrollment Period: a 60-day window after the plan ends to enroll in a new plan. If a new enrollment is not completed within 60 days, you will not be able to enroll in a new plan until Open Enrollment.
Applications must be completed prior to the plan’s enrollment deadline for the coverage to be effective on the first day of the following month. We encourage you to submit your application early as some insurers require new applications to be submitted as early as the 15th of the month. If an initial payment is not collected at the time of enrollment, check your mail frequently and be sure to pay your bill when it arrives.
You will receive a “welcome packet” from your new plan that will allow you to set up an online portal and/or access the portal through an app on your phone. You can make monthly premium payments through your portal or set up monthly automatic withdrawals.
#5. Reassess annually during Open Enrollment
Open Enrollment for Open Market Plans begins on November 1st each year. While the end date for Open Enrollment can vary, in general, any changes made before December 15th are effective on January 1st of the following year.
It is important to check your online portal, email, and mail frequently, especially in the fall. You may receive a letter from your insurance company advising of changes to your plan, such as premium increases or, in some cases, plan termination that would require you to choose a new plan for the following year.
Summary
While turning 26 may not hold the same excitement as turning 18 or 21, this is a significant milestone for a young adult as they take responsibility for their own health insurance.
With careful planning and consideration, you will have appropriate, cost-effective health insurance and a new appreciation for and understanding of the process. Most important, you will make your mother happy!