Health Insurance Options for Young Adults Aging Out of a Parent's Plan

If you’re approaching 26 years old, you may find yourself needing to find a new health insurance plan. Under Affordable Care Act provisions, your parents can't cover you under their health plan once you turn 26 (although states are allowed to set their own rules as long as they're no more restrictive than the ACA; for example, New Jersey allows young adults to remain on a parent's plan until they turn 31). Yet, at 26 years old, many young adults don’t have a stable career with a full-time job that provides health insurance benefits.

If this is your situation, you have several options for getting health insurance coverage when you turn 26 years old.

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Buy a Plan on Your Health Insurance Exchange

You can buy health insurance on your state’s health insurance exchange. If you have a modest income, you may qualify for a government subsidy to help pay the monthly premiums. For a single individual, subsidy eligibility extends up to an income of $51,040 in 2021 (this will increase to $51,520 for people enrolling in coverage for 2022), but in some areas, premiums are low enough that subsidy eligibility stops at a lower income threshold (this is especially likely to be true for younger people since their pre-subsidy premiums are lower than older enrollees' premiums). You'll need to use the exchange's quoting tool to see the exact prices in your area based on your income.

Depending on your income, you might also be eligible for subsidies that will reduce your out-of-pocket costs. You have to pick a silver plan in the exchange to get this additional assistance; if you're eligible, the subsidy will be automatically included when you select the plan.

Affordable Care Act health insurance exchanges don’t allow you to enroll in health insurance any time you choose. Generally, you’re only allowed to enroll during the open enrollment period that happens each autumn (November 1 to December 15 in most states).

However, since you’re losing your current health insurance coverage due to aging out of your parent’s plan, you’ll qualify for a special enrollment period when you turn 26. This will give you 60 days before your plan ends—as well as 60 days after it ends—to enroll in a health plan on the exchange even if it’s not open enrollment. If you miss this special enrollment window, you’ll have to wait until the next open enrollment period to buy health insurance on your state’s health insurance exchange.

Note that the special enrollment period in this case also applies outside the exchange, but subsidies aren't available outside the exchange, so that's not an option you should use if your income makes you subsidy-eligible.

Since you're under age 30, you also have access to catastrophic health insurance plans, although premium subsidies cannot be used with catastrophic plans, even if they're purchased in the exchange. So catastrophic plans and plans purchased outside the exchange are generally only a good choice if you're not eligible for premium subsidies.

COBRA Continuation Coverage

COBRA is a law that allows you to continue your current health insurance coverage for 18-36 months after you've aged out of your parent's health plan, lost your job, or gotten divorced. Not all health plans have to offer COBRA continuation coverage, though, as it only applies to employers with at least 20 employees. (if your parent's employer is smaller, state continuation laws might allow you to continue the coverage for a limited amount of time).

Here’s how COBRA works: You or your parents notify the health plan that you’ll be losing coverage due to losing your dependent status. The health plan then sends you information explaining how to continue your coverage. You’ll have 60 days to choose to continue your coverage through COBRA. If you don’t make that choice during those 60 days, you’ll lose your chance forever.

You’ll have to pay monthly premiums for your COBRA coverage, and it might cost a lot. Right now, your parent pays part (or in some cases, all) of the monthly premium, via payroll deduction. A portion of the premium is likely being covered by your parent's employer, although some organizations require employees to cover the full cost of adding dependents to the plan. When you take COBRA coverage, your parent’s employer doesn't contribute toward the premium for your coverage anymore. You have to pay both the part your parent was paying and the part your parent’s employer was paying. In addition, you’ll have to pay a 2% administrative fee.

You pay monthly COBRA premiums for as long as your COBRA coverage lasts, which can be up to 36 months. If you miss a COBRA premium payment and don't pay the amount due by the end of the grace period, your COBRA coverage ends and you can’t reinstate it. But if you get other coverage, you can cancel your COBRA coverage whenever you'd like.

Health Insurance Through Your Job

If you’re working and your employer offers health insurance, you may become eligible for that health insurance when you lose your current insurance. If you don’t think you can sign up for your workplace health insurance because it’s not open enrollment time, think again. Losing your parent’s coverage will make you eligible for a special enrollment period at your workplace, assuming you're otherwise eligible for coverage under your employer's plan. You’ll have 30-60 days to sign up, depending on the circumstances and the enrollment periods that your employer offers.

Just because you get a job doesn’t mean that you’ll automatically qualify for health insurance through your workplace. For example, many employers require you to work a minimum number of hours per week to be eligible for health insurance. You’ll have to meet that requirement before you’ll be eligible to sign up, even with a special enrollment period.

Even if you're eligible, job-based health insurance isn’t usually free. Your employer will take your share of the cost of the monthly premiums out of your paycheck, so expect smaller paychecks. That said, at least your employer is shouldering part of the cost of your health insurance premiums (most employers pay the majority of the cost), and you're paying your portion with pre-tax dollars. With COBRA, you're paying the entire premium yourself, with after-tax money. And if you enroll in a plan through the exchange but your income is too high to be subsidy-eligible, you'd also be paying the full premium yourself.


If your income is low, you may be eligible for Medicaid, a joint state/federal social welfare program that provides health insurance to certain disadvantaged or low-income residents. You must be a legal resident of the state in which you're applying for coverage, and Medicaid doesn’t usually offer coverage for lawfully present immigrants until they've been in the U.S. for five years.

Within certain guidelines, each state sets its own rules as to who qualifies for Medicaid and who doesn’t. If your income is 138% of federal poverty level or lower, you’ll qualify for Medicaid in 36 states and the District of Columbia. In the remaining states, qualifying for Medicaid is more difficult and limited to vulnerable populations such as pregnant women, the disabled, the blind, or people over the age of 64 (note that although Wisconsin is among the states that have not expanded Medicaid under the ACA, they do not have a coverage gap; low-income Wisconsin residents qualify for Medicaid or a premium subsidy in the exchange, depending on their income).

Premiums, deductibles, copays, and coinsurance are usually very small when you have Medicaid. Most Medicaid programs don't charge any premiums at all (although some do, for enrollees with income above the poverty level), and cost-sharing (copays, etc.) is minimal for people enrolled in Medicaid.

Learn more about how Medicaid works in your state by selecting your state on this interactive map.

Student Health

If you’re in college, you may be eligible for student health insurance through your school. You will likely have to enroll in a minimum number of courses in order to be eligible. And there's a good chance that your school will require you to have health coverage—meaning that the only way you'll be able to waive the school's health plan is if you show proof of other coverage. Check the specifics of the school's student health plan to make sure it’s adequate, including the coverage when you’ll be on vacation and perhaps out of town for long periods of time.

Alumni Association, Trade Association, and Other Options

Not eligible for student health because you’re not a student anymore? Some alumni associations offer health insurance to their members. Check with your university’s alumni association.

Self-employed? Check with your trade association if you’re a member of a trade. Check with your local chamber of commerce if you have your own small business. Some of these organizations offer group health plans to their members. Additionally, small businesses can buy health insurance for their employees, which can include the owner (in most states, you'll need to have at least one additional employee to qualify for a small group plan).

You can explore other young-adult health insurance options using an independent health insurance broker licensed by your state. These folks are experts in helping people pick a quality health plan that fits their needs. Your best bet is to use a broker who is certified by the exchange in your state so that you can see options both on and off the exchange and ensure that you're getting the coverage that's best for your situation.

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