Graduation season brings health insurance changes


We’re at the tail end of the season when the younger generation leaves the halls of academia and their parents hope they will soon leave the house for good.

In the days before the Affordable Care Act, getting a diploma also meant getting the boot from Mom or Dad’s health insurance plan.

Now, age 26 is the “magic age” when young adults reach the upper age limit for remaining on their parents’ coverage. But some questions remain. The biggest issues:

- When, exactly, do 26-year-olds have to leave their parents’ plan? Are they required to be dropped from the plan as soon as they reach their 26th birthday? Or is coverage continued throughout the remainder of the plan year?

- Are these young adults eligible for COBRA?

- And what if the 26-year-old is dropped from coverage after the annual open enrollment period is over? Then what?

Kaiser Health News reports that adult children who “age out” of a parent’s plan might be able to extend coverage through COBRA for up to 18 months if they pay the full cost, but other options might be more affordable. Individual carriers make the determination whether the 26-year-old is dropped from coverage on his 26th birthday or whether coverage continues until the end of that plan year. Mom or Dad needs to check this out. In addition, adult children who lose coverage through their parents qualify for a special open enrollment period during which they can sign up for another plan without facing a penalty.

If the young adult doesn’t have access to good coverage through the workplace, he or she can go to their state’s health insurance marketplace. Losing coverage under an existing plan is considered as a “qualifying life event” and the young adult has 60 days to sign up for coverage.

If the young adult’s income is between 100 and 400 percent of the federal poverty level (currently $11,490 and $45,960 for an individual), he could be eligible for tax credits to make coverage more affordable.

If her income is less than 138 percent of the federal poverty level ($15,856 for an individual) and she lives in one of the roughly half of states that have expanded Medicaid to cover childless adults, she may be eligible for that coverage.

Recent graduates who are not eligible for coverage through their parents have several options for finding coverage in the Health Insurance Marketplace. If the graduate’s student health coverage is ending, he may be eligible for the special enrollment period. If the graduate’s income qualifies him for Medicaid coverage, he may be able to apply for coverage in that program.

Another option for adults under age 30 is to sign up for a catastrophic health plan. This covers three primary care visits per year before the insured person meets his deductible, as well as certain preventive care benefits.

Of course, what every parent of a young adult wants most is to see their grown child with the means to provide their own health coverage. Such as a job, preferably one that also pays enough for that adult child to leave the nest!


Susan Rupe is assistant editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Connect with Susan →

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