I’m turning 26. What can I do about health insurance?

Thanks to the Patient Protection and Affordable Care Act (ACA), which was implemented in 2010, young Americans have been able to stay on their parents’ insurance until the age of 26. This lends a grace period to young people who might still be struggling to find stable employment in their early 20s. (This, of course, doesn’t account for the many Americans who do not have parents with health insurance.). All good things come to an end, though, and, at age 26, Americans must foray into the wide world of independent healthcare.

This venture seems like a big leap, especially if you have never had to navigate the healthcare system before. This transition can also be a bit thorny, as the rules get tricky between employer-based insurance and marketplace insurance. Never fear, though! Stay calm and have your social security card handy.

First things first: When do I get kicked off my parents’ insurance?

According to the ACA, you technically get “kicked off” of parental health insurance at age 26. The actual day this occurs varies according to your parents’ insurance. If your insurance is employer-based, then you will be removed from the plan the month that you turn 26. This means if you turn 26 in March 2020, you will be removed from the plan that exact month.

This is not the case for marketplace insurance. Marketplace insurance is, to be clear, private insurance that your parents would obtain from an insurance company without the assistance of an employer. In the case of marketplace insurance, you would have until December 31st of the year you turn 26 before you are officially removed from coverage. This is because December 31st would mark the end of the insurance’s enrollment period. When the enrollment period ends, you would be officially off the plan.

There are some knottier details between these two options. You can only share a marketplace plan with your parents if you are claimed as a dependent on their taxes. This is not always the case with employer-based plans.

Is there a grace period after I turn 26?

Yes, but, as stated above, the grace periods vary:

If you are operating under a marketplace plan, you have until the end of the year to find insurance.

If you are operating under an employer-based plan, you have 60 days during which you can qualify for a special enrollment period. During this period, you can apply for and obtain marketplace insurance.

If you are pursuing employer-based insurance, you will have to consult human resources to determine if you can enroll in your employer’s plan outside of open enrollment. In most cases, it is best to contact HR regarding health insurance before you turn 26 to ensure you will seamlessly transition into a new health plan.

Will I be penalized if I don’t have insurance?

No, not anymore. Under the ACA, there was a fee titled the “Shared Responsibility Payment.” This fee started in 2014 and lasted until 2018. (When you are filing taxes for 2019, you will not have to worry about it.) The fee applied to people who could afford health insurance but opted not to get it. Effectively, it was a penalty tax for those who actively did not participate in the healthcare system. The Tax Cuts and Jobs Act (TCJA), President Trump’s 2017 tax reform efforts, recently removed this fee.

When can I enroll in marketplace insurance?

There is a relatively narrow window for marketplace insurance. You can enroll in marketplace insurance from November 1st to December 15th each year. Now, if you are being removed from an employer-based plan, you will have 60 days to operate under a special enrollment period that will allow you to obtain marketplace insurance.

What might a marketplace insurance plan look like?

If you are an unmarried nonsmoker, a low-level insurance plan may cost around $200 - $300 per month. Higher-coverage plans can run as high as $700 - $800 per month. There is financial assistance available if you fall under a certain income bracket. The Henry J. Kaiser Foundation has a handy calculator that should help you determine if you are eligible for financial assistance.

How can I enroll in my employers’ health insurance?

If you are turning 26 in the next year, talk to your employer as soon as possible. Employers can make exemptions for special cases, but that depends on both the employer and the insurer. If you cannot “hop on” to your employers’ plan, you would have to wait until your employer hosts open enrollment. For many employers, open enrollment happens around November or December.

Can I subscribe to two health insurance plans?

Absolutely! If your employer offers you health insurance before you turn 26, it would be prudent to hop onto the plan as soon as possible. Having two plans is in no way detrimental to your health or health coverage, although you will, effectively, be paying twice for health insurance. However, with two plans, you may be able to get more of your copays or prescription drug prices covered.

When you have two plans, one plan will operate as your “primary provider.” You will not get to decide which plan is your primary plan. The second plan will take the role of “secondary provider.” When filing a claim, the primary provider will pay for as much of the cost as it is able. The secondary provider will then cover the remaining balance. (The two plans, in tandem, never pay more than 100% of the claim.) In most cases, the primary provider will be the employer-associated provider. The way the two plans intermingle is called “coordination of benefits” and it is usually navigated by the insurance companies themselves.

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