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Turning 26? How to navigate health insurance for the first time on your own
I had just turned 21 and was celebrating my first legal drink when my friend pointed out that this was my last big birthday for a long time.I remember feeling a little sad. Now I’d add: Not long enough.Five years later, we find ourselves drinking to — if not celebrating — another turning point in…
I had just turned 21 and was celebrating my first legal drink when my friend pointed out that this was my last big birthday for a long time.
I remember feeling a little sad. Now I'd add: Not long enough.
Five years later, we find ourselves drinking to — if not celebrating — another turning point in our lives.
Soon we'll both be 26 and thrown off our parents' health insurance plans.
My father and I
Source: Anne Nova | CNBC
Before the passage of the Affordable Care Act in 2010, most company health insurance plans covered dependents through college. The ACA required employers to cover them until their 26th birthday.
That means for the first quarter of my life, I've rarely dug into my wallet for medical expenses, save for co-payments here and there. And according to one government estimate, more than 2 million people between the ages of 19 and 25 are covered by their mom or dad's workplace plan, too.
The other day, a friend mentioned that her parent's insurance actually let her stay on for a period after she turned 26. Did I have more time? I texted my father to find out. He immediately replied: “No.”
I had until the end of my birthday month, he added, which meant I'd officially be on my own come Feb. 1, 2020.
The change was coming fast.
I had questions: Could I keep the same doctors? Did I really need vision insurance? What's the difference between a premium and a deductible? Did my father still love me? (Just kidding.)
Recently, I spoke to health-care experts about how to navigate health insurance when you turn 26.
Birthday Cake
Source: Betty Crocker
“Give yourself time,” said Caitlin Donovan, a spokeswoman for the Patient Advocate Foundation, a nonprofit that helps patients access and pay for health care. “It's not difficult, but it can be tedious.”
Your first step should be to check with your parents' health insurance provider or employer to learn exactly when your coverage ends.
Turns out many employer plans do let dependents stick around after their 26th birthday. “The age-26 rule is a good one to keep in mind, but in practice it can vary quite a bit,” Donovan said.
And 30 states have some form of extended coverage for dependents, Donovan said. For example: In New Jersey, some dependent, unmarried adults are eligible to stay on their parents' plan until they're 31.
Annie Nova
Source: Annie Nova
Whenever you do lose your parents' health insurance, a so-called qualifying event is triggered. That means if your employer offers health insurance, he or she must allow you to sign up for their plan even if their official open enrollment period has ended.
Don't wait until you've blown out your candles to act, said Tracy Watts, a senior partner at benefits firm Mercer. “It's best to contact your employer at least 30 days in advance of the qualifying event to find out what their procedure is for electing coverage under this provision,” Watts said.
You'll also want to understand what documentation you'll need, and whether you enroll over the phone, online or through the mail, she said.
These special enrollment periods are time-limited, said Laurel Lucia, director of the Health Care Program at the University of California Berkeley's Center for Labor Research and Education.
If you miss it, she warned: “You'll have to go without insurance until the next open enrollment period.”
The age-26 rule is a good one to keep in mind, but in practice it can vary quite a bit.
Caitlin Donovan
a spokeswoman for the Patient Advocate Foundation
I was told by someone in the human resources department at CNBC that I have 31 days after I lose my insurance to sign up with the company plan. And I can enroll pretty easily through our online benefits portal.
Of course, many people don't have access to health insurance through their job. You still have options.
Adults aging out of their parents' insurance have 60 days before and after their 26th birthday to enroll in a marketplace plan.
On Healthcare.gov — or at your state's health insurance website — you can apply for coverage and learn if you qualify for any subsidies, Donovan said. You'll need some personal information handy, including your Social Security number and household income.
Other options include private insurance and “affinity plans,” Watts said. “Affinity plans are options offered to groups such as professional associations or alumni groups,” she said.
People should be wary of short-term health insurance plans, Donovan said. “These plans don't have to cover any of the essential health benefits,” she said. “And there's a reason they're called essential.”
Whether your health insurance comes from your job or the marketplace, the amount you'll pay each month is known as your premium — and it isn't the best way to judge the overall cost of your plan, Donovan said.
In addition, you'll want to evaluate the plan's deductible, coinsurance and co-payments. Confused?
Deductible: How much you'll have to shell out before your employer's plan kicks in. Coinsurance: the share you'll still be on the hook for with covered services. Co-payments: The fixed amount you'll pay for health care services after you've paid your deductible.
At CNBC, I can decide between two options: A Blue Cross Blue Shield plan with a lower monthly premium and higher deductible, or another with a higher monthly premium and lower deductible.
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“Many people are over-insured,” Watts said. “If you're young and healthy, it's okay to consider signing up for the least expensive plan. It will likely have a big deductible, but provide good coverage if something catastrophic happens.”
To play it safe, I'll likely sign up for the slightly more expensive plan because the difference is very small.
More decisions: Should you sign up for dental and vision coverage?
“Do the math,” Watts said.
If you have stellar dental health, find out what your dentist charges for an annual exam and cleaning, and compare that to the annual price of the dental insurance.
Same deal with vision coverage: Do you wear glasses? I'll definitely need it; every year, I sit one row closer to the movie theater screen.
As the health insurance coverage through your parents comes to an end, Donovan said, you may want to get all the medical appointments and tests you need out of the way.
“Once the new plan begins, you'll have to start over to meet your deductible,” she said. (Ophthalmologist, cardiologist, endocrinologist, dermatologist, check!)
Try to avoid a window in which you're uninsured. It can be dangerous— and expensive.
“Even young healthy people can unexpectedly face high health-care expenses if they are in an accident or suddenly develop or discover a serious health condition,” Lucia said.
And while the federal government no longer fines the uninsured, some states still penalize their uncovered residents.
“The cost may seem like a burden, but it is nothing compared to the avalanche of bills that will await you if you hold off,” Donovan said.
Happy Birthday!
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