I'm turning 26: leaving a parent's health plan

The age 26 rule

Under the Affordable Care Act, health plans that offer coverage for dependent children must make it available to them until they turn 26. HealthCare.gov explains that this applies whether the young adult is married or not, has or adopts a child, starts or leaves school, lives with their parents or elsewhere, is claimed as a dependent on their parents' taxes or not, and even if they turn down an offer of coverage through their own job.

The rule makes the years before 26 unusually simple: many young adults never need to think about coverage at all. That simplicity is also why the 26th birthday can come as a surprise. The parent's plan stops covering you because of your age alone, and nothing replaces it automatically.

The good news is that losing coverage at 26 is treated as a qualifying event, which opens sign-up windows that would otherwise be closed. The rest of this pathway explains those windows and the four routes most people choose between.

When coverage actually ends

Plans do not all end dependent coverage on the same day. Some stop on the birthday itself, some at the end of that month, and some later, depending on the plan's rules and the state. HealthCare.gov advises checking with the plan. The parent who holds the plan can ask their benefits office or the insurer for the date in writing.

That date matters because the sign-up windows count from it. Knowing it a few months ahead turns a scramble into a simple planning step.

Your sign-up window

HealthCare.gov treats aging off a parent's plan as a loss of coverage that qualifies for a Special Enrollment Period. In practice that means:

• You can usually report the coming loss and choose a Marketplace plan up to 60 days before the parent's coverage ends, so the new plan can start when the old one stops.
• You also have up to 60 days after the coverage ends to choose a plan, although waiting can leave a gap.

The enrollment periods pathway explains Special Enrollment Periods in general.

Route 1: your own job-based plan

If your own employer offers health coverage, losing coverage on a parent's plan gives you special enrollment rights in your employer's plan, even if you turned it down before. The US Department of Labor explains that group health plans must give at least 30 days after losing other coverage to request enrollment, and some plans allow longer. The 30 days is shorter than the Marketplace's 60, so this is the deadline to watch first if you might want the job-based plan.

Having an offer of job-based coverage also affects the Marketplace route. HealthCare.gov explains that if your employer's offer is considered affordable and meets a minimum value standard, you generally cannot get a premium tax credit for a Marketplace plan. You could still buy a Marketplace plan, but at full price. The starting a job pathway says more about reading a job-based offer.

Route 2: a Marketplace plan

If you do not have an affordable job-based offer, a plan through HealthCare.gov or your state's Marketplace is the main alternative. What it costs depends on your expected income for the year and your household. HealthCare.gov explains that savings in the form of a premium tax credit are available within a range of household incomes, and that the Marketplace application calculates what you qualify for.

One detail that catches young adults: for Marketplace purposes, your household is based on who files taxes together and who is claimed as a dependent. If a parent still claims you as a dependent on their tax return, that affects how your household and income are counted. The Marketplace application asks these questions, and a Navigator can explain them.

Route 3: Medicaid

If your income is low, you may qualify for Medicaid, depending on your state's rules. There is no enrollment window: you can apply any time through your state Medicaid agency or through the Marketplace application, which screens for Medicaid. The Medicaid and CHIP pathway explains how the program works.

Route 4: COBRA on the parent's plan

If the parent's coverage is a job-based plan subject to COBRA, a dependent child who stops being eligible for the plan is one of the events that allows continuation coverage. The US Department of Labor's guide to COBRA explains that in this situation the family has to notify the plan within 60 days of the event, and that continuation for a dependent who loses that status can last up to 36 months.

COBRA keeps the same plan, which can matter if you are in the middle of treatment. The trade-off is cost: the plan can charge up to 102 percent of the full premium, and there is no premium tax credit for COBRA. The lost my job pathway explains COBRA's steps in more detail.

Questions to take to official help

HealthCare.gov or your state's Marketplace, and the Navigators they list, help with these questions at no cost. Questions about COBRA rights can go to the US Department of Labor's Employee Benefits Security Administration.

Next pathway: I'm starting a job: understanding a job-based plan offer