Young individuals approaching 26 years of age may find themselves in a dilemma, while choosing the best and affordable health insurance plan. As per the Affordable Care Act provisions, a 26-year individual cannot be covered under their parent’s health plan. However, some states have set their rules, for example New Jersey allows young individuals to remain in their parent’s plan until they turn 31, but the majority of states have set the age limit of 26 years for young adults to remain covered under their parent’s plan. It is observed that quite a large number of young adults don’t have a stable career with a full-time job providing health insurance. Thus, all such young individuals approaching 26 years of age can find some good and affordable options for obtaining health insurance coverage.
Buy a Health Insurance Exchange Plan
Young individuals can buy a health insurance plan from their state’s health insurance exchange. Depending upon their income, they may even qualify for a government subsidy, which will help them to pay the monthly premiums. A single individual with an income of $49,960 in 2020 is eligible for a subsidy. However, in areas where premiums are low enough, the subsidy eligibility is at a lower income threshold. Individuals should use the exchange’s quoting tool to know the actual price of the plan in their area, depending upon their income. Based on their income, individuals might also be eligible for subsidies that will reduce their out-of-pocket costs. However, individuals will require to choose a silver plan from the exchange to obtain this additional subsidy. If the individuals qualify for this subsidy, then it will be automatically included while selecting the plan.
Affordable Care Act health insurance exchanges allow individuals to enroll in a health insurance plan during the open enrollment period that starts in most of the states from November 1 and ends on December 15. However, since individuals are losing their current health plan due to aging out of their parent’s plan, they qualify for a special enrollment period on turning 26. This provides them 60 days before their plan ends, and 60 days after their plan ends to enroll in a health insurance exchange plan, even if it is not the open enrollment period. In case if the individuals miss this short special enrollment period, then they will need to wait until the next open enrollment period to buy a health plan on their state’s health insurance exchange.
Young individuals should keep in mind that the special enrollment period is also applicable outside the exchange plan, but they will not be able to avail subsidies outside the exchange plan. Thus, individuals who are subsidy-eligible based on their income should not consider buying outside the exchange plan. Individuals under the age of 30 years are also eligible for catastrophic health insurance plans, though they cannot use premium subsidies with catastrophic plans, even if it is purchased in the exchange. Therefore, catastrophic plans purchased outside the exchange are usually a good choice for individuals who are not eligible for premium subsidies.
Employer-Sponsored Health Plan
If the young individuals are working and their employers offer health insurance, then individuals may become eligible for health insurance upon losing coverage under their parent’s plan. Losing their parent’s coverage will make them eligible for a special enrollment period, and they will become eligible for coverage under their employer’s plan. Individuals just being employed do not automatically qualify for employer-sponsored health plans, mainly because many employers have certain requirements, which employees have to fulfill to become eligible for their plan. Many employers require their employees to work a certain number of hours per week to become eligible for a health plan, and employees are supposed to meet the requirement before they become eligible to sign up with a special enrollment period.
Even if individuals become eligible for job-based health insurance, they should keep in mind that the employer-sponsored plan is not usually free. Employers take the employee’s share of the monthly premium cost from their paycheck. However, with the employer-sponsored plan, employers shoulder a part of employees’ health insurance plans, but with COBRA plans, employees are paying the entire premium themselves. Even if individuals enroll in a plan through the exchange, but their incomes are too high to be subsidy-eligible, then also they would be paying the full premium themselves.
Low-income individuals may be eligible for a Medicaid plan, which is a combined state and federal social welfare program offering health insurance to certain disadvantaged or low-income individuals. To qualify for a Medicaid plan, young individuals should be a legal resident of the state, in which they are applying for coverage. Medicaid does not offer health coverage to lawfully present immigrants until they have been in the country for five years. Every state has its rules for individuals to qualify for Medicaid. Individuals whose income is 138% of the federal poverty level or lower, usually qualify for Medicaid in 35 U.S. states and the District of Columbia. However, in the rest of the state qualifying for Medicaid is much difficult and is restricted to vulnerable populations like the disabled, pregnant women, blind, or the elderly class only. Individuals having Medicaid plans generally have very small premiums, deductibles, copays, and coinsurance. Most of the Medicaid plans do not charge any premiums, and even cost-sharing like copays is minimal for Medicaid enrollees. However, some Medicaid plans charge premiums from enrollees with income above the poverty level.
Student Health Plan
If the young adults are in college, then they may be eligible for a student health plan through their colleges. Young individuals will likely have to enroll in a certain number of courses to become eligible. There is also a good chance that their colleges require them to have health coverage through them, and they can only avoid enrolling in their college’s health plan by showing proof of their other coverage. Individuals should check the specifics and details of the college’s student health plan to ensure that the plan is perfect in terms of coverage when they are on vacation, or perhaps out of town for a long duration.
COBRA Continuation Coverage Plan
As per the COBRA law, young individuals are allowed to continue with their current plan for 18-36 months after they have aged out of their parent’s health plan or have lost job-based coverage. Though, not all health plans offer COBRA continuation coverage, an individual whose parent employer is small, and has at least 20 employees might allow them to continue the coverage for a limited amount of time. Individuals or their parents need to notify the health plan that they will be losing coverage because they are losing their dependent status. Then, health plans send information on how to continue coverage and provide individuals 60 days to choose their coverage through COBRA, and if they choose in these 60 days, then they will forever lose the chance.
Individuals are required to pay monthly premiums for their COBRA coverage, but COBRA plans cost a lot. Individuals when receiving coverage under their parent’s plan, a part of the premium is paid by their parents, and a portion is paid by their parent’s employer. However, when they take COBRA coverage, then their parent’s employers don’t contribute toward the premium anymore, and individuals are responsible for paying both their parent part as well as the part paid by their parent’s employer. Besides, individuals also have to pay a 2% administrative fee.
Some Other Options
Young adults who are not eligible for a student health plan, because they are no more students can check some other options. Some of the options are discussed below:
Alumni Associations – Young adults can check with their university’s alumni association because some alumni associations offer health insurance to their members. If their university’s alumni association is offering health insurance plans, then they can enroll for such plans.
Trade Association – Self-employed young adults who are members of the trade can check with their trade association to enroll in a health plan. Individuals who are owners of small businesses can check with their local chamber of commerce. Some of these organizations offer group health plans to their members.
Other Options – Young adults can even explore other health insurance options by taking the assistance of an independent and licensed health insurance broker, or taking the help of some reputed health insurance portals. These health insurance experts help people pick a quality health plan that fits their needs.