You're turning 26. How will you get health insurance?
Happy birthday! By 26 you've got quite a few life milestones under your belt. Now here's another one: shopping for health insurance. Thanks to the Patient Protection and Affordable Care Act, young adults can stay on their parents’ health insurance plans until they turn 26—no matter if they are married, have children of their own, or live in a different state. Provisions such as these have helped more people obtain health insurance, though coverage rates have fallen in recent years.
But with your 26th birthday approaching, you may need to make decisions about how to stay insured.
Chances are, you're a first-time health insurance shopper. Here’s what you need to know about your options for health insurance after age 26.
What happens at 26?
For the most part, 26 is the magic number to buy your own health insurance, but there are exceptions. New York state, for example, allows people who are under 30 and unmarried to stay on their parents’ health insurance plans. New Jersey lets unmarried and childless residents do the same until age 31.
Your parents’ plan may allow you to keep your coverage until the end of the month that you turn 26—or perhaps even until the end of the calendar year. Others remove you the day you turn 26. As your birthday approaches, make sure to understand when your parents’ plan ends for you.
Normally, you can only apply for health insurance coverage during a window of time known as open enrollment, which occurs between November and December each year. But young adults who age out of their parents’ health care insurance are eligible for a special open enrollment of 120 days—the 60 days before you turn 26 and the 60 days after—to buy their own insurance. If you miss this window, you may have to wait for the regular open enrollment period in the fall and risk a gap in coverage.
What are your options?
Ready to get your own insurance? There are several ways to get it.
You may be able to remain on your parents’ plan for up to 36 months after turning 26 through the Consolidated Omnibus Budget Reconciliation Act, more commonly known as COBRA (provided your parents work for a company that has more than 20 employees). You’ll have to submit a written form to ask for coverage to continue and you’ll have to pay for it separately.
Talk to your own employer’s human resources department about what health insurance options are available to you as an employee and when you need to submit your paperwork.
If you are married, look into signing up for your spouse’s employer-sponsored health insurance plan.
Health insurance marketplace
If you’re self-employed, or don’t have coverage through your employer or your spouse’s, you can get coverage through the Health Insurance Marketplace (the exchange).
Start your search at healthcare.gov, which can help you figure out which type of plan you are eligible for and how much you can expect to pay. You may qualify for a federal tax credit depending on your income (as long as no one else claims you as a dependent). Individuals living in states that expanded Medicaid and whose modified adjusted gross income (MAGI) is between 100 and 400 percent of the federal poverty level can get a tax credit—effectively a subsidy for their premium.
You can get help sorting through your options by calling the Marketplace Call Center at 800-318-2596 or finding a local representative in your community by searching on healthcare.gov. Alternatively, you can work with an insurance agent or broker to help you enroll, but bear in mind that the tax credit is only available when you enroll in a Marketplace plan.
Student health plan
Students enrolled in colleges and universities that offer a student health plan can enroll in health insurance plans through their schools.
Get to know the “metals”
When you buy health insurance on the Health Insurance Marketplace, you’ll have the option to purchase different levels of coverage, which go by four “metal” categories: Bronze, Silver, Gold, and Platinum. Bronze and silver plans have lower premiums—but lower levels of coverage—than Gold and Platinum plans.
The different plans split the cost of health care this way:
If you aren’t interested in a comprehensive plan, you can instead choose a catastrophic plan. These plans have low monthly premiums, but high deductibles. They are meant to protect you against the financial hit of a major medical event, though some plans might also cover some preventive care.
For 2020, the deductible for an individual catastrophic plan will be $8,150. After you satisfy the deductible, the insurance plan will pay for all medical costs without charging copays or coinsurance.
However, these plans are only available to people who are:
- Under 30 years old
- Have a hardship exemption
If you are eligible for catastrophic insurance, it will be displayed alongside your other plan options after you’ve entered all your information.
Consider the total cost
As you’re comparing the cost of insurance, don’t stop at the monthly premium. To get an apples-to-apples comparison, pay attention to co-pays, deductibles, and coinsurance. Can you afford to pay a bigger share of a major medical emergency if you choose a more affordable premium?
Also, be mindful of what kind of care you can get in-network. If you live in an urban center with lots of health care providers, a plan that only covers care in-network may suffice. But in sparsely populated areas, an in-network plan may leave you without many choices for medical care.
Should you skip health insurance?
If you’re healthy today, it might be easy to think that will always be the case. And starting in 2020, there will no longer be a tax penalty if you don’t buy health insurance coverage, as there was in the past. But going without health insurance can be a risky proposition. Your health status can change in an instant, and given the high cost of medical care, being without coverage can quickly derail your finances. Even a relatively minor health care emergency like appendicitis can cost you tens of thousands of dollars if you don’t have insurance.