Twenty six is a magical age under the Affordable Care Act (ACA). Until they turn 26, young adults are allowed to remain covered by their parents’ health insurance plans. If your 26th birthday is right around the corner you may have a lot of questions, especially if you’ve never had to purchase your own insurance before. Not sure when to get health insurance? We’ll tell you when to begin shopping around for a plan.
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Aging out of Your Parent’s Plan
Under the ACA, you can stay on your parent’s healthcare plan until you turn 26, regardless of whether you live with them. If you graduate from college and move to a different state, you can still have access to your parent’s health insurance (depending on how the plan works). Even if you get married or have your own child before the age of 26, you may still be eligible for the healthcare benefits that your parents receive.
Depending on the kind of healthcare coverage your parents have, you may lose coverage immediately on the day you turn 26. Some plans allow young adults to remain on their parents’ plans until the end of the month following their 26th birthday. Others let them stay on their parents’ plans until the end of the tax year.
Because different healthcare plans have different rules, it’s best to find out when coverage will end for your parent’s specific plan. That way, you’ll know when you’ll need to purchase health insurance. If you lose health insurance following your 26th birthday and you’re uninsured for more than three months in a row, you may have to pay a fine. That could change soon, however, especially if Obamacare is repealed.
The Special Enrollment Period
In most cases, you can only enroll in a healthcare plan during the open enrollment period. So unless you’re applying for Medicaid, CHIP coverage or Medicare (or your employer has a different open enrollment period), you’ll probably have to sign up for health insurance between November and the end of January. That’s not the case when you turn 26.
Turning 26 triggers a special enrollment period that lasts for 120 days. Young adults who will age out of their parents’ healthcare plans can enroll in their own plans within the 60-day window before they turn 26 or the 60-day window after their birthday.
Still not sure when to get health insurance? A good rule of thumb is to sign up for a plan no later than the 15th day of the month (during the special enrollment period) if you want your plan to begin the following month. For example, if you want your healthcare plan to start on October 1, you’ll need to enroll in a plan no later than September 15.
If you fail to apply for health insurance during the special enrollment period, you may have to wait until the next open enrollment period begins in the fall. Experiencing a gap in coverage could be problematic if you find yourself in an emergency situation.
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How to Enroll in a Healthcare Plan
When you’re ready to purchase your own health insurance, you have several options. You can speak to someone in the human resources department about enrolling in a healthcare plan provided by your employer. You could also ask whether you qualify for COBRA coverage under your parent’s plan.
Through the Consolidated Omnibus Budget Reconciliation Act (COBRA), you may be able to retain coverage under your parent’s healthcare plan for up to 36 months after turning 26. To be eligible for COBRA coverage, you’ll have to submit a written request to your parent’s boss. If your parent works for a company with fewer than 21 employees, your state may offer temporary health insurance that functions like COBRA coverage.
A third option is to sign up for a plan through the Health Insurance Marketplace. Lower-income individuals may qualify for the premium tax credit that reduces their tax liability. But government subsidies may no longer be available if key components of the ACA go up in flames. If you think you may qualify for Medicaid, that’s another route you may need to explore.
What Happens If Obamacare Disappears
Discussions about the possibility of repealing and replacing the ACA leave many Americans and healthcare providers in limbo. Even if the Trump administration and Congress decide to gut the ACA, it may take at least a year or two for any new policies to go into effect.
If certain provisions under the ACA are on their way out, young adults under the age of 26 may lose the right to retain coverage under their parents’ plans. While Trump expressed interest in keeping the health benefit, lawmakers recently voted against an amendment that would protect it.
Related Article: How to Pick a Health Insurance Plan
Choosing a healthcare plan may take time. While you can wait until the 60-day period after your 26th birthday to apply for health insurance, it’s best to begin researching and comparing plans as early as possible. Deciding between an HMO plan, a PPO health plan and a POS plan may seem impossible if you haven’t assessed your needs or weighed the pros and cons of the insurance policies that are available to you.
Update: So many people reached out to us looking for financial planning help for their health insurance needs that we started our own matching service to help you find a financial advisor. The SmartAdvisor matching tool will pair you with a trusted professional who can provide the kind of financial check-up you need to address your health insurance decisions.
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