Turning 26? What You Need to Know About Health Insurance

standret / Getty Images/iStockphoto
standret / Getty Images/iStockphoto

Typically, 26 is the age when you have to start paying for your own health insurance because you’re no longer eligible to be covered under your parent’s plan. And health insurance is not a one-size-fits-all solution. Many different options exist, and you need someone to help you navigate the process of choosing the best plan for you.

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KJ Martin of Your Forever Agency recommends talking to a broker when looking for health insurance because a broker will have access to multiple plans versus just one, which will help you find one that works best for you. “The broker remains agnostic to the carrier and is just recommending an excellent solution based on your needs,” said Martin. “A good broker worth their weight should explain exclusions, limitations and gaps, as well as the benefits of the plan.”

Here’s what else you need to know if turning 26 is on the horizon and you’re concerned about what to do know before enrolling in a healthcare plan.

You May Be Able To Stay on Your Parents’ Plan Longer

In general, you can remain on your parent’s health insurance plan until you’re 26. However, some states will allow you to stay on your parents’ plan longer if you meet certain criteria. For instance, if you’re an unmarried New York resident, you can remain insured by your parents until you’re 30. And in New Jersey, you can remain on your parents’ health plan until you are 31 as long as you’re unmarried with no dependents.

You Have 120 Days to Purchase Insurance Under the Affordable Care Act

“There is a 120-day special enrollment period for adults that are reaching their 26th birthday,” said Nick Schrader, an insurance agent with Texas General Insurance. “So a month before your birthday, you have to scout for the best and affordable insurance coverage for yourself. If you failed to do so, you have to wait until the following year’s special enrollment period.”

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When you’re about to turn 26, you’ll have 60 days before your birthday and 60 days after to purchase a new health plan on the ACA’s Health Insurance Marketplace. However, it’s important to note that if you’re not purchasing a plan on the Marketplace, such as if you opt to enroll in health insurance via your employer, you’ll only have 30 days after your 26th birthday to enroll in a health insurance plan.

You Should Understand Health Insurance Terminology

Marshall Staton, director of human resources at Aeroflow Healthcare, recommends understanding health insurance terminology before enrolling in a health insurance plan. According to Staton, these terms include:

  • Copay: The fixed price an employee must pay for a service before receiving it.

  • Premium: The amount an employee pays for health insurance each month.

  • Deductible: The amount an employee pays before insurance starts to pay.

  • Coinsurance: The percentage of a covered health service that an employee pays after paying their deductible.

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“It’s important to understand the definition of each of these terms, their relationship with each other and their role in their associated healthcare costs, especially if choosing from different tiers of insurance,” Staton said. “While a high-deductible, lower-premium plan that covers routine doctors’ appointments may be preferred […] those with preexisting health conditions may want one with a higher premium and a lower deductible to ensure more coverage of doctor visits, medications and procedures.”

Don’t Assume the Cheapest Health Insurance Option Is the Best

“If you are now being thrown into a confusing situation where you have to find insurance for yourself for the first time, it can be tempting to just go for the cheapest option since you are most likely very healthy,” said Grant Dodge, a broker at Health Benefits Associates, Inc. “Having a little understanding of some better choices can go a long way when you look into the numbers.”

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“For example, someone could spend an additional $25 a month, which comes out to $300 a year, but lower their maximum out of pocket by around $2,500,” Dodge continued. “This lowers your exposure in a worst-case scenario situation. It is much easier to budget an extra $25 a month than it is to come up with another $2,500 all at once.”

You Have Other Health Insurance Options

The Marketplace or your employer aren’t your only options for health insurance. Laura Adams, MBA, a health insurance expert with US Insurance Agents, had these suggestions:

  • Join a partner’s plan: If your spouse or partner has employer-sponsored health insurance, joining their plan could be your most affordable option. Group insurance generally costs much less than individual coverage.

  • Get a short-term plan: If you miss the deadline to enroll in an ACA health plan and don’t qualify for special enrollment (such as having a child or losing your job), you can purchase a short-term health plan until the next enrollment period comes around. The problem is, short-term plans don’t meet ACA standards and only offer temporary coverage, such as for a few months or up to a year. You may be eligible to renew a plan for up to three years in some states, depending on the insurer.

  • Enroll in Medicaid and CHIP (Children’s Health Insurance Program): If you can’t afford health insurance, you may be eligible for free or low-cost coverage through Medicaid or CHIP, depending on your income, family size and the state where you live. Unlike ACA health plans, state-run programs don’t have set open enrollment periods, so coverage can begin any time of year if you qualify.

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Last updated: June 4, 2021

This article originally appeared on GOBankingRates.com: Turning 26? What You Need to Know About Health Insurance