What Is The Health Insurance Grace Period When You Turn 26
Your Special Enrollment Period begins 60 days before your 26th birthday and lasts for 60 days afterward. If your coverage ends in the middle of the year, for example at the end of your birth month, you should buy health insurance during the Special Enrollment Period to avoid a gap in coverage. A coverage gap means you are not covered by any health insurance plan and you would have to pay full price out-of-pocket for any health care services including medical emergencies.
If your parents have private health insurance through their employer, that employer decides when your coverage under their plan ends. For example, this could be the last day of your birth month, or at the end of the calendar year. Ask your parents to check their employee handbooks or ask their HR department when your coverage will end.
If you have been covered by your parents ACA plan, sometimes called an Obamacare plan, your coverage will not end until the last day of the calendar year, and you have until the end of that years Open Enrollment period to purchase your own health insurance. Most likely your coverage will end during the Open Enrollment Period, which is between November and the end of January. This allows you to possibly have more time after turning 26 to decide because you can wait until Open Enrollment at the end of the year.
New York State Continuation Coverage
The New York State continuation coverage law resembles the federal COBRA. It applies to employers with fewer than 20 employees and gives workers who work for employers with fewer than 20 employees and their families the right to continue to purchase group health insurance for limited periods of time when they would otherwise lose coverage due to certain events. Qualifying events include voluntary or involuntary job loss, reduction in hours, transition between jobs, death, divorce and other life events. Qualified individuals may be required to pay up to 102% of the premium cost. People eligible for continuation coverage may have up to 36 months of coverage.
The Affordable Care Act Also Known As Obamacare Or The Aca Opened The Door For Many People To Get Health Insurance Who Previously Didnt Have Access
A provision of the law allows young adults to stay on their parents health insurance until age 26. As a result, millions of young adults became eligible to have health insurance on their parents plans who wouldnt have qualified otherwise.
The Affordable Care Act has been popular with this demographic. According to the Department of Health and Human Services, between 2010 and early 2016, 6.1 million young adults have gained coverage by opting to stay on their parents plan. However, many of those young adults may soon be facing their 26th birthday and the end of their current coverage.
So what do you do now if youre losing your parents coverage? Here are some options you might want to take.
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Tying Healthcare To Employment
Another issue for 26-year-olds aging out of their parents insurance coverage stems from the lack of jobs available that provide health insurance or the income to purchase their own. While unemployment is down from its April 2020 high of 14.8%, it is still 6.0%, which is 2.4% higher than it was pre-pandemic in February 2020.
As Americans, living in a country that abides around 30 million uninsured and millions more poorly insured, we have long been inured to the cruelty of our employment-based health insurance system but the COVID-19 pandemic revealed in a new and shocking way how indefensible this for-profit healthcare system really is, says Stephanie Nakajima, director of communications at Healthcare-NOW.
Take Lily, a Michigan resident who worked full-time in the music and events industry pre-COVID. Her job provided health insurance, but she was furloughed indefinitely in May 2020. She eventually found a new job, but this one doesnt have benefits. Lily can use her moms insurance now. But she doesnt know what shell do when she turns 26 in October.
I really believe individuals my age in the US are getting crushed from every side. The lack of affordable healthcare, the continuous rise of the cost of livingwe cant win, says Lily.
Lilys mom works in the events industry too, and the family also fears that her benefits could end, leaving Lily, her mom, and her sister uninsured.
The Age 26 Health Insurance Rule
In most states, turning 26 means you’re no longer eligible for health insurance coverage through a parent’s plan.
This health insurance rule was established by the Affordable Care Act . Before this, insurers routinely dropped young adults from their parent’s insurance policies after they reached a certain age or stopped attending school full time after the age of 19, which meant they no longer qualified as dependents under the rules of the Internal Revenue Service. As a result, many young adults lost their insurance earlier.
Before the ACA, more than 30% of young Americans were uninsured, making them the highest uninsured group of any group in the country. The ACA provision has bridged this coverage gap, making it possible for millions of young Americans to retain health care coverage through their parents.
With this rule, young adults age 26 and under can stay on their parent’s health insurance plan even if they:
- Have started or finished school
- Are no longer claimed as a tax dependent
- Are married
- Adopt or have a child
- Turn down employer-sponsored health insurance coverage
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Losing Health Insurance Triggers A Special Enrollment Period
When you age off your parent’s health insurance plan, you automatically qualify for a special enrollment period under the ACA, allowing you to enroll in a marketplace plan outside of the regular enrollment periods.
The SEP for signing up for health insurance starts 60 days before your coverage ends and lasts 60 days after coverage ends, totaling 180 days.
If you are slated to lose coverage, you should know the exact date coverage ends while finding alternative sources of coverage that will take effect on the day that coverage terminates so there are no gaps or lapses in coverage.
In other words, if you enroll in a health care plan on Jan. 3, coverage does not usually take effect on Jan. 4, making it important to plan ahead and make sure you enroll in a plan so that coverage starts when you need it to.
Is There A Penalty For Not Enrolling In Health Insurance When I Turn 26
No, there is no longer a fee for not having health coverage. However, some states have their own individual health insurance mandates.
While you may not be charged a fee for not having health insurance, having continuous coverage can help you save money in the future. Even if youre relatively healthy right now, health insurance provides financial protection. Accidents happen, and a health plan protects you from high, unexpected medical costs.
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How Long Can You Stay On Your Parent’s Insurance After You Turn 26
The timelines for when coverage ends depends on the type of provided coverage.
- If you are covered under your parent’s employer policy, you have until the end of the month when you turn 26 to choose a new health insurance plan.
- If you receive coverage under your parents ACA market-based plan, you have until the end of the calendar year, Dec. 31, before your coverage ends even if you turn 26 mid-year.
My 26th Birthday Is Next Week And I Will Lose Coverage Under My Parents Plan At The End Of This Month Open Enrollment Has Closed What Do I Do Now
You should act now to review your coverage options and sign up for new coverage. You may have more than one option.
If your parents plan was offered by an employer with more than 20 workers, you should be eligible for COBRA. This is an option to continue coverage under the plan for up to 36 months. COBRA coverage is typically an expensive option because your parents employer is no longer required to contribute to the premium, but it may be important option for some young adults, for example, if you are currently in treatment for a condition and prefer not to change coverage now.
If you have not already received a notice from your parents plan that your dependent status is about to end, you should notify them that you are turning 26. Your parents plan must then send you a notice of your right to elect COBRA. You have 60 days from the latter of that notice or the date dependent coverage ends to elect or decline COBRA coverage. If you elect COBRA, you have up to 45 days to pay the first premium If you dont make the first payment on time, your COBRA election will not take effect.
Once you elect COBRA and pay the first premium, you will not be eligible to apply for a Marketplace plan with tax credits until the next Open Enrollment period. Even though COBRA lasts 36 months, you do have the option of dropping it earlier if you become eligible for other coverage.
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How To Get Added To A Parents Insurance Plan
- Job-based plans: Your parent can add you to their insurance during the plans yearly Open Enrollment Period or during a Special Enrollment Period. Your parent should check with the plan or their employers benefits department for details.
- Plans bought through the Health Insurance Marketplace®: When a parent applies for a new plan in the Marketplace, they can include you on their application. They can add you to an existing Marketplace plan only during the yearly Open Enrollment Period or a Special Enrollment Period.
When Will I Need To Choose A New Health Insurance Policy
When you will need to choose a new health insurance policy depends on the type of health insurance that your parents have. If your parents have a marketplace health insurance policy, then you will be allowed until the end of the year to enroll in a policy even if you turn 26 midyear. This would require you to submit your own marketplace health insurance application and be aware of the open enrollment dates in your state.
If you were previously covered by your parent’s employer policy, then you will have until the end of the month that you turn 26 years old to choose a new health insurance plan. Furthermore, losing your parent’s employer-sponsored health insurance coverage will open a special enrollment period during which you can buy your own health insurance. Your SEP begins 60 days before and continues 60 days after you lose coverage. During this time you are allowed special access to your state health insurance marketplace and can decide what coverage you would like to purchase.
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Use An Aca Special Enrollment Period
When you or a member of your household loses health insurance, a special enrollment period that extends 60 days from the loss of the job and health insurance will allow you to buy an ACA policy at HealthCare.gov. In addition, some states have reopened ACA enrollment for various periods so that anyone may apply.
A number of other life eventsincluding getting married or having or adopting a babywill also qualify you for special enrollment, which you can check out on HealthCare.gov.
Be sure you have, or can obtain, the documents you need, such as a letter from your employer or from an insurance company.
Once youve qualified for special enrollment, you can start viewing your options on HealthCare.gov. Examine the policies available in your zip code, compare prices and coverage options, and see which plans have the best star ratings, which reflect member surveys, clinical measures, and plan administration. There are three ways to lower your cost on the website:
- Cost-sharing reductions are a federal subsidy that helps reduce out-of-pocket costs such as deductibles, copayments, and coinsurance.
- Premium tax credits reduce the amount of premiums you pay monthly.
- A catastrophic health insurance plan has lower premiums. However, most of the benefits dont kick in until you have paid the first several thousand dollars of medical costs.
You can check which of these approaches you may qualify for by visiting HealthCare.gov.
When You Will Lose Health Insurance Through Your Parents
Currently, the Affordable Care Act mandates that children are covered by a parents health insurance plan until the child turns 26, if the parents health plan offers coverage for dependents. The rule applies to unmarried and married children and all types of health plans, including employer-sponsored coverage, according to the Department of Labor.
The law also allows you to remain on a parents plan if you:
- Go to college or drop out of school
- Adopt or have a child
- Move out of your parents house
- Are not claimed as a dependent on your parents tax returns
- Refuse an offer of employer-sponsored health insurance
If your parents have coverage from the health insurance marketplace, you can remain on the policy until December 31 of the year you turn 26, or the oldest age allowed by your states insurance code.
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What Is Cobra And Can I Get It If I Lose Coverage On My Parents Plan
COBRA continuation coverage, including continuation coverage under state law, may be available to you to continue employer-sponsored coverage for a limited time.
COBRA continuation coverage is generally only offered through employers with 20 or more employees.
Federal COBRA continuation coverage usually lasts for 18 months if you lose coverage under your parents plan. Maximum duration for state continuation coverage varies under state law. Check with your parents employer for details.
You pay the full plan membership bill every month, plus a small administrative fee, so it can be a costly option.
To learn more about your COBRA continuation coverage options available from Kaiser Permanente, contact your parents employer.
What Are My Coverage Options
Besides COBRA, you have a number of other options to consider when shopping for coverage after 26:
- Catastrophic Plans: If youre under 30 or qualify for an affordability exception, a catastrophic plan ensures you have insurance if the worst happens. It also boasts affordable monthly premiums, but you may have higher deductibles outside of free preventative care and primary care visits.
- Employer Coverage: Most Americans access health care through their jobs. Talk with your current employer about their benefits program to learn more about job-based plans.
- You receive more customized coverage that suits your health care needs and budget. You may also qualify for subsidies if youre not a tax dependent or meet specific income requirements.
- Medicaid & CHIP: You get access to affordable or free health care. However, you need to prove that you meet certain criteria, including income, disability and employment standards in most states. Your coverage may fluctuate depending on whos in office, especially if youre seeking womens health care or another politicized service.
- Student Plans: If youre enrolled in college, your university could be offering affordable insurance to students. These benefits typically offer cost-effective and comprehensive coverage designed to meet the unique needs of students.
Some States Extend The Age Limit
Some states follow the ACAs age-26 rule, but others have laws that allow you to remain on a parents health insurance policy longerbut only under certain conditions. Although the following states offer exceptions, health care laws are subject to repeal or revision.
|No age limit for full-time studentsNo age limit for full-time students who are National Guard or reservists called into active dutyNo age limit for dependents called for federal active duty
Will I Lose My Health Coverage When I Turn 26
If you have coverage in your own name when you turn 26, it wont be affected. But if youre a dependent on your parents plan, you may lose coverage under that plan either are the end of your birth month or end of the calendar year. Please refer to your Evidence of Coverage or have your parents check with their employer. Now is the time to explore your options for a Kaiser Permanente plan of your own.
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I Want To Make Sure I Get That Discount
If you think you might qualify for a discount, be sure to enter your income information and household size. If you have $0 income, youre a ringer for Medi-Cal. If you make over $17,000 a year and less than $47,000 a year, then youll likely get a discount on a regular plan. The lower your income is, the greater the discount that you get.
As far as household size, if youre single, then just put 1. If youre married and/or have children, then count all the people that you include when you file your taxes. If youre married, you have to file taxes as married filing jointly in order to qualify for a discount.
The discount is usually referred to as a government subsidy or an up-front tax credit. Up-front is the key word. If you qualify for a subsidy, then youll never have to pay the full price. Youll just pay the discounted price each month as your health insurance premium.