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I’m 24. How do I choose between coverage from my father’s plan and an exchange plan?

 

Q: I am 24 and have coverage through my father’s employer. But I could buy my own insurance in the exchange instead. What are the pros and cons?

A. First, compare the costs:

  • Depending on how your father’s employer structures benefits, and whether there are other family members covered on the plan, there may or may not be an additional premium taken out of your father’s paycheck to cover you. Removing you from his plan might save him money on premiums each month, or it might not — he would need to check with his human resources department to find out. [Note that if your father had a plan that he purchased himself, in the individual market (as opposed to obtaining coverage from his employer), he’d be paying for your coverage as part of his monthly premiums, regardless of how many other kids are in the family; dependents age 21 and older are each charged a premium by the insurer, and there wouldn’t be an employer paying a portion of the cost. But if he were buying coverage in the exchange, he might be receiving a premium subsidy that offsets some of the cost to cover his kids.]
  • If you shop in the exchange for your own coverage, your eligibility for subsidies is based on household income. If your father claims you as a dependent on his tax return, his income (and the rest of his household’s income) would be counted in determining whether you’re eligible for subsidies in the exchange. But if you file your own taxes, your household income would be based on the income on your own return.
  • Be sure to compare the non-premium costs of the various options too. Consider the deductible, copays, coinsurance, and out-of-pocket maximum on the plan through your father’s employer, and how it compares with the options you could get on your own.

Then find out the details of the provider network for your father’s plan. Can you go out of network? How much more would it cost? If your father’s plan is limited to local medical providers and you live far away, that might be a reason to get your own plan instead.

If you’re married, your father’s plan does not have to cover your spouse. You can remain on your father’s plan until you turn 26 — even if you’re married — but your spouse would have to get a separate policy.

Finally, keep in mind that if you become pregnant, your father’s plan may not cover maternity care for you. His plan is almost certainly required to cover maternity for employees and spouses, but that provision does not apply to employees’ children. Prenatal care is covered for dependents, but the cost of the labor and delivery could be out-of-pocket. If you get your own plan, it will cover maternity.

You can only enroll in a plan in the individual market during the annual open enrollment period (with coverage effective January 1), or if you experience a qualifying event that triggers a special enrollment period. So you cannot drop off your father’s plan anytime you like and switch to an individual market plan. Note, however, that if your father’s plan doesn’t follow the calendar year (ie, it renews on a date other than January 1), you’d be eligible for a special enrollment period to buy a plan in the exchange when your father’s plan renews [see CFR 15.420(d)(1)(ii)].


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.