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Can young adults still remain on their parents’ health plans until age 26?

Under the ACA, young adults are able to remain on their parents' health insurance until they turn 26. | Image: motortion / stock.adobe.com

Under the ACA, young adults are able to remain on their parents' health insurance until they turn 26. | Image: motortion / stock.adobe.com

Can young adults still remain on their parents’ health plans until age 26?

Q. I know that in 2010 the ACA began allowing young adults to remain on their parents’ health insurance until they turned 26. Has anything changed about that rule? Is it better to remain on my parents’ plan or get my own plan? When I turn 26, what options are available?

A. Nothing has changed except that grandfathered group plans must now allow adult children to remain covered until age 26 regardless of whether they have other employer coverage available. Prior to 2014, grandfathered group plans could refuse to cover young adult dependents if they had access to other employer coverage, but that’s no longer the case.

Allowing young adults to stay on their parents’ insurance adds an extra coverage option for people at the start of their careers. But that does not mean that remaining on a parent’s health plan is always the best choice.

The ACA doesn’t require small group health plans to offer dependent coverage, although most of them do. Large group plans must offer coverage to full-time employees and their dependents in order to comply with the ACA’s employer mandate. Plans that do offer dependent coverage must allow adult children to remain on a parent’s plan until age 26, regardless of whether the young adult lives with the parent, is financially dependent on the parent, has other coverage options, is a student, or is married.

(Note that coverage does not have to extend to the dependent’s spouse or children. If a young adult has a child of their own while still covered under their own parents’ health plan, they will likely need to secure separate coverage for the baby. And if they get married, they will likely not be able to add their spouse to their existing coverage. CHIP or Medicaid may be available for the baby, depending on income. And either of those events — marriage or the birth of a baby — would count as a qualifying event that would allow the young adult to disenroll from their parents’ health plan and enroll in a new health plan together with their spouse and/or new baby. The new health plan could be an employer-sponsored plan or a plan obtained in the marketplace/exchange.)

If a family has minor children as well as young adult children under age 26 — and if their premium is one family rate regardless of how many children are on the plan — it probably makes sense to keep the young adult members on the policy until age 26, unless the young adult lives in a different area where the family’s plan doesn’t have any in-network providers.

But if the only dependents on the plan are young adults, or if the premium is based on the number of dependents, there are other considerations to take into account. Some employers contribute only to employees’ coverage, with dependents’ premiums entirely payroll deducted. In that case, the total cost to insure a family might be lower if young adults get their own coverage in the individual market.

This is especially true for young adults with relatively low incomes who qualify for a subsidy in the exchange, or for premium-free coverage via Medicaid. If your parents do not claim you as a dependent on their tax return, you can apply for a policy in the exchange with subsidy eligibility based on your income alone. If your parents do claim you as a dependent, your subsidy eligibility is based on the entire household’s income (here’s another FAQ that explains how premium subsidies are calculated in situations like this).

Special considerations: Provider networks and maternity coverage

If you don’t live in the same area as your parents, it might make more sense to shop for your own policy, since the provider network for your parents’ plan may be limited in your area. And although maternity coverage is now included on all plans, it’s not required for dependents on large group plans. Getting your own policy guarantees that you’ll have maternity coverage. If you’re not yet 26 and you still have coverage on a parent’s plan, you can shop for your own plan during the annual open enrollment period (in most states, that’s November 1 to January 15), or if you experience a qualifying event, such as moving to a new area. You can also enroll in your own employer’s plan if that option becomes available to you.

Special enrollment periods to transition to your own plan

Losing coverage on a parent’s plan when you turn 26 is a qualifying event that triggers a special open enrollment period for individual health insurance, or enrollment in a group plan through your employer if you’re eligible. Your parent’s plan might cover you only until the end of the month in which you turn 26, or they might extend coverage through the end of the year you turn 26, so double-check with the plan to make sure you understand when your coverage will end.

You have 60 days before and after that date to enroll in a new individual plan (or 30 days to enroll in your employer’s group plan). And the special enrollment period that allows you to sign up for a plan in the individual market applies even if you have the option to extend your coverage under your parent’s plan using COBRA.

You can shop in the exchange/marketplace or off-exchange — the special open enrollment window applies either way (as noted in the next section, premium subsidies are only available if you shop in the exchange). If you enroll during the 60 days prior to your loss of coverage, your new plan will be effective the first of the following month after your old plan ends, which generally allows for seamless coverage. But if you enroll in the 60 days following your loss of coverage, the soonest your new plan can take effect is the first of the month after you apply, meaning that you will have a bit of a gap in coverage.

Financial assistance

Depending on your income, you may qualify for premium tax credits (subsidies) that pay a portion of your premiums as long as you shop in the exchange. Subsidy eligibility also depends on the unsubsidized cost of the coverage. Here’s another FAQ that explains this in more detail, but know that subsidies are larger and more widely available from 2021 through 2025, due to the American Rescue Plan and Inflation Reduction Act. So coverage is more affordable than it used to be.

There are also exchange policies available with lower cost-sharing requirements if your income does not exceed 250% of the poverty level.

Catastrophic individual plans are available to applicants under age 30, with premiums that are generally lower than bronze plans. But premium subsidies are not available on catastrophic plans, so a “metal” plan is likely a better choice if your income makes you eligible for a premium subsidy.

Medicaid is also an option if you’re eligible. In states that have expanded Medicaid, you can qualify as a single person with an income of about $18,754 in 2022 (this is in the continental U.S.; the limits are higher in Alaska and Hawaii, and DC provides Medicaid coverage at higher income limits). The Medicaid eligibility threshold is tied to the federal poverty level, which generally increases each year. The new federal poverty level numbers are announced in mid-late January each year.

If your parents’ policy qualifies for COBRA continuation, you’re eligible to elect COBRA for up to 36 months after aging out of the coverage at age 26. But you’ll be responsible for the full cost of the coverage, plus an administration fee of up to 2%. In many cases, there are less expensive options available in the individual market. And as noted above, the option to buy your own plan during a special enrollment period triggered by your loss of coverage is available even if you also have the option to extend your plan with COBRA.

The ACA’s impact

In September 2015, HHS released data regarding changes in insurance coverage across various demographics in the years before and after the implementation of the ACA. Determining exactly how many young adults have remained on their parents’ health plans is challenging, but we do know from the HHS data that coverage across young adults (ages 19 – 25) increased by 5.5 million people from 2010 through September 2015.

Nearly half of that gain (2.3 million people) occurred between 2010 and October 2013, before the bulk of the ACA’s reforms were implemented (exchanges, guaranteed issue coverage, premium subsidies, etc.). So it’s likely that a good chunk of those 2.3 million young adults gained coverage via a parent’s plan. Since then, the increase has likely been a combination of young adults remaining on their parents’ health plans as well as young adults purchasing their own plans in the exchanges.


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.

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B J
B J
2 years ago

Can the parent’s employer charge extra beyond the standard premium to keep the young adult (under 26) on the parents plan as primary if the young adult has insurance available through their own employer and declines their own coverage? (Employed dependent fee). This fee also applies to other dependents/spouses on the plan who decline their own coverage. Is there anything in the ACA that would restrict applying this fee to young adults under 26?

Louise Norris
Louise Norris
2 years ago
Reply to  B J

Employers can impose spousal surcharges when an employee’s spouse declines their own employer’s plan in order to enroll in the spousal coverage. But my understanding is that this is not permissible for young adult children who are covered as dependents on the plan. Here is some additional clarification on this: https://www.thehortongroup.com/resources/spousal-and-dependent-carve-outs-and-surcharges

Jane
Jane
1 year ago

My 25-year-old son is covered by my plan. He wants to stay on my plan because it is much better than what his employer offers, but he would also like to join his employer’s high deductible plan so he can open up an HSA. If he opens up this account for himself, how will that affect his coverage under my plan?

Louise Norris
Editor
6 months ago
Reply to  Jane

Jane,
He cannot open and contribute to an HSA unless his only health coverage is an HSA-qualified high-deductible health plan. So he cannot do that while he’s still covered under your plan. If and when he switched to his employer’s HDHP (and drops his coverage under your plan), he’d be able to start contributing to an HSA. Here’s more about how HSAs/HDHPs work: https://www.healthinsurance.org/faqs/how-does-a-health-savings-account-hsa-work/

Lisa
Lisa
7 months ago

Marketplace is in violation of the Affordable care act – I have two adult children under the age of 26. I attempted to apply for coverage for all three of us on one plan when my husband died in July. I was denied, and informed by marketplace that my children must find their own plans. I attempted to apply on two separate occasions and both times was denied and told they had to find their own plans. One child has no income. the other works part time and cannot afford even the lowest of the so called affordable plans. I have looked everywhere for advice on how to address this extremely glaring violation of the law and have met with no response or advice. Do you happen to have any kind of helpful guidance on how to remedy this issue? Thank you.

Louise Norris
Editor
6 months ago
Reply to  Lisa

Lisa,
I assume your children are no longer your tax dependents and/or don’t live with you? You can still enroll them on your plan, but it might not be the best solution (for example, your plan might not have any in-network providers where they live).
I’m not sure why the marketplace said you couldn’t enroll them, although it’s possible that you were trying to enroll outside of open enrollment? Enrollment is currently closed in nearly every state, unless you’ve got a qualifying event that triggers a special enrollment period. But enrollment will open again in November, for coverage effective January 1. I would advise that you seek out a broker or navigator in your area who can walk you through the coverage options for yourself and your children.

steve
steve
25 days ago
Reply to  Louise Norris

I stumbled upon your question by accident and wanted to reply. Just taking a guess but parents who try to enroll themselves and dependents in the marketplace may find themselves in a situation where the marketplace forces the kids on Medicaid depending on income level. This is just my experience as an insurance broker.

Louise Norris
Editor
25 days ago
Reply to  steve

Steve, that can often be the case if the children are still minors, as Medicaid/CHIP eligibility extends to much higher income levels for minors. But for young adults, the Medicaid eligibility rules wouldn’t be any different than they are for other adults under the age of 65.

Deno
Deno
6 months ago

Can my son who is 23 continue to stay on my health plan and be enrolled in his employers high deductible health plan as well? Would one plan become primary and the other be a secondary plan? If not which plan would be better for him to be under. He is currently out of state so there may not be any in network doctors to see where he is.

Louise Norris
Editor
6 months ago
Reply to  Deno

Yes, he can be covered under both plans. His own employer-sponsored plan would be primary, and yours would be secondary. Although as you note, there may not be any in-network providers under your plan; in that case, it wouldn’t be useful where he is.
But it’s important to understand that if he wants to take advantage of being able to contribute to a health savings account (HSA) due to having the high-deductible health plan (assuming it’s an HSA-qualified plan), he cannot have any other insurance in addition to that plan. Remaining on your insurance as well would make him ineligible to contribute to an HSA, so neither he nor his employer could make any contributions to the account. Here’s more about how HSAs work: https://www.healthinsurance.org/faqs/how-does-a-health-savings-account-hsa-work/

Charles
Charles
4 months ago

If I enroll in medicare at age 65, will my under 26 child be eligible for coverage by my plan?

Louise Norris
Editor
4 months ago
Reply to  Charles

No. Medicare is always individual coverage; there’s no spouse or dependent coverage under Medicare (if two spouses are both Medicare-eligible, they will each have their own separate policy).
If you transition to Medicare at age 65, you’ll need to obtain separate coverage for your child, regardless of their age. You can do this through the marketplace/exchange in your state, or they can enroll in their own employer’s plan (if available) or Medicaid (if they’re eligible based on income).

Liz
Liz
3 months ago

I am 58 and live with my parents. I have been helping them and they can me cash gifts to help me, but nothing over the gift limits. Am I eligible for the ACA

Louise Norris
Editor
3 months ago
Reply to  Liz

If you’re wondering about your eligibility for premium tax credits (subsidies) under the ACA, that depends on your ACA-specific modified adjusted gross income, which is explained here: https://www.healthinsurance.org/glossary/modified-adjusted-gross-income-magi/ It’s the same as AGI (from your tax return) for most people, but there are a few things that have to be added to AGI if you have them. If the gifts you receive are not taxable, they wouldn’t be included in your MAGI.

Once you know your ACA-specific MAGI (or have a fairly good idea of what it will be), you can use our subsidy calculator to get an idea of how much subsidy you’d be eligible for, if any: https://www.healthinsurance.org/obamacare/subsidy-calculator/ (that’s for 2022; it will be updated for 2023 once the prices are available).

Open enrollment for 2023 coverage will begin November 1, 2022, and run through January 15 in most states. The exchange/marketplace will be able to determine your exact subsidy amount when you apply.

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