What should I do about health insurance when I turn 26?
Young people need to find their own health insurance by the time they turn 26. Credit: Getty Images/jwblinn
Alexis Zizzo, who will turn 23 this weekend, has a few years before she needs to find her own health insurance, but she's already started to research options for when she ages out of her parent's insurance.
The recent college graduate, who is searching for a job, said she frequently visits doctors to maintain her health because she has a "few pre-existing conditions," and keeping up with her appointments wouldn't be feasible out of pocket.
"I know what it costs for me to maintain my health," said Zizzo, a Commack resident. "I need to know what I'm expecting when the day comes. I don't want it to show up, and then I'm 26 and two days old and something happens."
For Zizzo, like many young adults, turning 26 represents a new era of post-adolescence shaped by the dreaded question: What about health insurance?
That’s the cutoff age dictated by the Affordable Care Act passed in 2010, when insurance issuers are no longer required to offer dependents coverage.
Employer-based plans usually offer coverage through the end of a child’s 26th birthday month, while state or federal plans usually end coverage Dec. 31 the year a child turns 26, according to the National Association of Insurance Commissioners. Those who don’t have insurance through their workplace can seek plans through their state or federal marketplace.
Around 15% of 26-year-olds opt to continue without insurance, according to KFF, a nonprofit health policy research, polling and news organization. That’s the highest rate among any age group in the United States, the group said.
Affordability is one of the biggest reasons people forgo coverage, said Marilyn Cabrera, health care policy and advocacy manager with Young Invincibles, a national nonprofit advocacy group for young adults between 18 and 34 that has an office in Manhattan.
“I think there's this myth that young adults maybe don’t need coverage because they're healthier,” Cabrera said. But, “sometimes we see that young adults do still have chronic illnesses … and nearly half of uninsured young adults report having problems paying medical bills.”
People without health insurance are more likely to struggle to access care due to cost, according to KFF, and more broadly, a large uninsured population could mean lower economic productivity.
The milestone may become more difficult to afford if pandemic-era health insurance tax breaks aren’t renewed at the end of this year. The issue has divided Democrats and Republicans in a government shutdown that has now extended for nearly a month, Newsday has reported.
A Washington Post analysis predicts that the most popular health insurance plans sold on the federal marketplace Healthcare.gov will spike an average 30% next year.
Here are four tips for young adults looking to enroll in health insurance coverage by the time they turn 26.
Can I stay on my parent's plan after I turn 26?
Some employers offer plans that can bring a child through age 29 by adding a rider, said Michael Margolis, CEO of Manhattan-based insurance broker Margolis & Associates.
It’s also possible, if a parent’s health plan is sponsored by a workplace with 20 or more employees, that a young adult may qualify to temporarily extend health coverage up to 36 months under a law called COBRA for a cost up to 102% the premium for that period, he said.
In New York, smaller workplaces with fewer than 20 employees must also provide COBRA benefits known as State Continuance to children aging out of their parents’ health plans, which entitles the young adult to 36 months of coverage at a monthly rate of 102% the actual cost to the employer, according to the state.
It's important to read "the fine print" of a parent's plan, said Kirat Kharode, CEO and managing partner at Pinewood Family Care Co. in New Jersey, a medical practice that operates based on a subscription-based model designed to lower health care costs for patients. He warned: "Some people lose coverage at midnight on their birthday, others stay on through the month or year. Unfortunately, a lot of people don’t realize it until they’re suddenly uninsured."
How do I choose a plan through my employer?
For those with an employer-sponsored plan, “it’s really important that they talk to their HR folks and they understand what their benefits are and what those costs are,” Kharode said. It’s also important to learn the jargon that comes with the health insurance industry, like “co-pay” and “deductible,” he added. “These are terms that will come up often and they’re ones that are specific to the insurance plan that they choose, whether they choose it from the individual marketplace or they choose it through their employer-sponsored plan.
“Understand your options, the benefits that exist and what you’re looking to get out of it,” Kharode said.
What if I don’t have an employer-sponsored plan?
Young people seeking individual health care plans should start by looking at what plans are available and their cost by checking their state exchanges, Kharode said.
In New York, residents can shop for health insurance online at New York State of Health. Depending on income, some people may also qualify for free or inexpensive insurance from Medicaid or the Essential Plan.
Are there experts to help me navigate the marketplace?
Health navigators are available online and in person across the country, including on Long Island, to help young adults navigate the industry for the first time, according to Cabrera.
Young Invincibles encourages shoppers to explore the marketplace before leaving a parent's plan, she said.
Leaving a parent's plan will start a special enrollment period to find coverage. Missing that window means the shopper will have to wait until the next open enrollment period, she said.
Breaking down health care lingo
- A deductible is the amount to be paid out of pocket before insurance kicks in.
- A co-pay, or copayment, is a fixed payment owed for a visit to a doctor's office or emergency room.
- Coinsurance is a percentage of the total bill to be paid out of pocket, generally applied to hospital bills. This can get pricey.
- An out-of-pocket maximum is the most that an individual will have to pay throughout the year, as long as they see in-network physicians and pay the deductible.
Source: KFF Health News
Brianne Ledda covers personal finance and affordability for Newsday. She previously covered Southold and Greenport for The Suffolk Times and is a graduate of Stony Brook University.
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