Typically, before the Affordable Care Act (ACA), carriers could remove adult children from the policyowner’s coverage based on their age, regardless of their student status. Upon the implementation of the ACA, singed into law March 23, 2010, which requires plans and issuers that offer dependent child coverage to make the coverage available until the adult child reaches the age of twenty-six (26). Under the ACA, you can stay on your parent’s healthcare plan until you turn 26, regardless of whether you live with them. Even if you get married or have your own child before the age of 26, you may still be eligible for the healthcare benefits that your parents receive, but not your dependent or spouse.
Carriers administer the loss of dependent coverage differently. Some plans allow young adults to remain on their parents’ plans until the end of the month following their 26th birthday. Other carriers will terminate coverage on the birthdate. Some carriers will even allow a 31-day temporary extension of coverage after the dependent coverage ends. Because different healthcare plans have different rules, its best to find out when coverage will end for the parent’s specific plan.
This rule is applied to both married and unmarried children that qualify for all plans within the individual market and to all employer plans. Any qualified individual must be offered all of the benefit packages, like the ten (10) Essential Health Benefits (EHB), and cannot be required to pay more for coverage than similarly situated individuals.
Turning 26 triggers a Special Enrollment Period (SEP) that lasts for a total of 120 days. Young adults who will age out of their parent’s healthcare plans can enroll in their own plans within the 60-day window before they turn 26 or the 60-day window following their birthday. Failing to apply for health insurance during SEP will result in the dependent having to wait till the next annual Open Enrollment period, which is November 1- December 15 for a January 1 effective date.
Once you reach 26 and “age out” of your parent’s coverage, you may have several healthcare options.
- Your Employer’s Health Insurance
Probably the easiest and cheapest way to get health insurance is by getting it through your employer. Employers often pay a large potion of health care costs, which makes it a price competitive option for a young adult. Typically, you are limited to the plans that the employer offers, but plans can be less expensive than other options and usually excellent benefits. Open Enrollment for employer sponsored group coverage is different for each employer and can be different than the November 1 to December 15 Open Enrollment for the individual market.
- Spouse’s Health Plan
If a young adult is married, he or she can try to get added to their spouse’s health plan. Adding another person to the plan will likely increase premiums. However, you will get the health coverage you need and its typically more affordable than other options mentioned. If you, or your spouse, are employed and the employer offers a health plan, ask whether you are eligible for coverage under that plan. Special Enrollment in another employer plan must be requested within 60 days of your loss of coverage.
- Consolidated Omnibus Budget Reconciliation Act (C.O.B.R.A.)
C.O.B.R.A. requires employers with at least 20 employees to extend health coverage to people who lose their employer-sponsored health insurance. Before the ACA, C.O.B.R.A. insurance was how most Americans got health insurance after being laid off. Though C.O.B.R.A. is often an avenue for people who get laid off, it is also available for a child who ages out of their parents’ plan. To elect C.O.B.R.A. coverage, notify your parents’ employer in writing within 60 days of reaching age 26. In turn, your plan should notify you of the right to extend health care benefits under C.O.B.R.A.. You will have 60 days from the date the notice was sent to elect C.O.B.R.A. coverage. You are able to stay on a C.O.B.R.A. plan between 18 and 36 months, depending on the reason for losing your coverage. C.O.B.R.A. plans do not have a contribution to reduce premium, which means you will be responsibly to pay for all of the health plan costs plus an administrative fee of up to 2%. If your parents’ plan is sponsored by an employer with 20 or fewer employees, you may have similar rights under State law, instead of under C.O.B.R.A.. You should ask your parents’ employer, or your State Insurance Department if this applies, and if so, how you would request the extended coverage.
- Individual Health Plan
The ACA created easier ways for people to find an individual policy. The law created plans that are designated either On-Exchange and Off-Exchange, which allows people to search for and compare various health plans in one place. The most significant difference between On and Off Exchange is the Advance Premium Tax Credit (ATC), referred as a subsidy. Consumers can qualify for a subsidy based on their total household income which can be applied to coverage offered only in the On-Exchange. Off-Exchange is insurance offered by carriers with no subsidy available. An individual plan through the exchanges can be affordable option depending on your salary. People whose income is below 400% of the Federal Poverty Line (FPL) can receive subsidies to lower premiums. Individual plans, either On-Exchange or Off-Exchange, are broken into three categories or metal tiers:
- Bronze: lowest premiums, highest out of pocket costs and deductible
- Silver: higher premiums than Bronze but lower than Gold, lower out-of-pocket costs than Bronze. Only plan that consumers can receive a Cost Share Reduction (CSR).
- Gold: higher premiums than Silver and Bronze, but lowest out-of-pocket costs and deductible.
- Short-term health plan
Short-term health plans are low-cost, but they also have limited benefits. A short-term health plan is available for up to 360 days.Even though short-term insurance provides an attractive alternative to ACA compliant coverage, it is important to understand the significant differences between the two. ACA coverage does not offer the comprehensive benefits of ACA plans. Since short-term coverage does not comply with rules established by the ACA, restriction to benefits related to preexisting conditions can be applied. Texas insurance carrier rules apply a 12-month look back period for non-invasive conditions and a 5-year look back period for more serious conditions such as cancer, heart attack, blood disorder, emphysema, diabetes, COPD, or ulcerative colitis. The preexisting exclusion clause means that benefits are not available for those conditions that have been diagnosed or treated within either the 12-month or 5-year look back period. The preexisting condition exclusion is the reason that Stateside always identifies if there is a medical condition or medical history to be aware of before discussing short-term coverage as an option to ACA coverage. The preexisting condition exclusion will also apply to prescriptions.
STATESIDE CAN HELP!
Stateside Insurance Services, since 2003, has focused on providing comprehensive health insurance information, responsive customer service and expert industry knowledge for Texas consumers. Stateside has annually been recognized by health insurance carriers and the Health Insurance Marketplace as a Top Producer in Texas.
Whether the health insurance policy is for an individual, family, small business or supplemental Medicare coverage, Stateside dedicates the time, and our deep industry expertise, to ensure our clients have identified the best health insurance plan for their specific needs.
Stateside is available to answer any general questions regarding your coverage options, can provide a subsidy determination, and even assist in creating and submitting online applications for ACA compliant plans during an Open Enrollment or throughout Special Enrollment periods.
Stateside can be contacted either by phone (866) 444-3332 (toll free) or by email at info@texasplans.com. Our Telephone Appointment System can be accessed through:
Phone Appointment Reservation.
By using the Telephone Appointment System, clients can take advantage of scheduling a health insurance discussion when convenient for their schedule. During Open Enrollment phone appointment availability is expanded to include extended hours and weekends.