Q. I am a 21-year-old dependent living with my parents and going to school full time. I’m not married and have no kids, so do I apply for health insurance as a household of one and list only my own income? Or do I have to be on my parents’ insurance?
A. You can get your own health insurance policy, but since you’re counted as a dependent on your parents’ tax return, your household income for subsidy eligibility determination purposes will include their income as well, and you’ll be counted as a household of three (or more, if you have siblings who are also dependents on your parents’ tax return).
Thanks to the American Rescue Plan, there is no longer an income cap for marketplace subsidy eligibility through 2025. But subsidy eligibility also depends on the cost of health insurance plans in your area. And it’s important to note that if your parents have separate coverage and you’re applying for a marketplace plan for just yourself, the cost of just your coverage would be compared with the whole family’s income to determine affordability, potentially making it unlikely that you’d qualify for a subsidy.
If your parents have employer-sponsored health coverage and it’s convenient and affordable for you to remain on the plan, you can do so (even after you’re no longer a dependent, if that works for your family). Your parents would need to check with their employer to see how much it costs to keep you on their plan and whether their premiums would change if you obtained your own coverage instead.
If your parents also need coverage, the family can apply for one marketplace health insurance policy with all of you on the same coverage. If not, you can apply for your own policy. Either way, when it comes to calculating subsidy eligibility, you and your parents are considered one household for tax filing purposes, since they claim you as a dependent on their return. So your combined household income would need to be listed, along with the total number of people in the household.
The same is true for your parents if they are applying for their own health insurance plan for just the two of them; they would still list their household as three people (or more, if they have other dependent children), and include your income along with theirs when applying for premium tax credits.
When you’re applying for subsidies in the exchange/Marketplace, the household’s income and number of family members is based on what will be reported to the IRS on the household’s tax return. But premiums are only calculated for the family members who are actually applying for coverage.
Even after you’re no longer your parents’ tax dependent, you’ll be able to stay on their health insurance until you’re 26, if that’s what works best for your family.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.