Turning 26: choosing your first health plan

Coverage on a parent’s job-based plan usually ends during or shortly after the month you turn 26. Losing it opens a special enrollment period that starts 60 days before the coverage ends and closes 60 days after, so you can line up your own plan with no gap.

Marketplace plans work differently. If your parent’s plan came from the Marketplace, you can usually stay on it through December 31 of the year you turn 26, or later where state rules allow.

How long after you turn 26 does coverage end?

On a job-based plan, the plan documents set the date. It’s often the end of the month you turn 26 or the end of the plan year, and some plans end it on the birthday itself, so ask your parent to get the exact date from the employer’s benefits office. Get it in writing. That letter is also the proof the Marketplace asks for when you use your special enrollment period.

Say you turn 26 on July 18, and your parent’s employer plan covers you through July 31. Your window opened in early June. It stays open until near the end of September, 60 days after the old coverage ends, but the day you pick a plan decides your start date. Pick one by July 31, and the new plan can start August 1. Pick one on August 10, and it starts September 1, leaving August uncovered.

What happens when you turn 26?

Losing a parent’s coverage opens several doors at once: a Marketplace plan, your own employer’s plan if you have one, COBRA through the parent’s plan, or Medicaid if your income is low enough in your state. The deadlines differ. The Marketplace window runs 60 days on either side of the loss. Your own employer has to let you join outside its yearly open enrollment if you turned its plan down before, but job-based plans often give you only 30 days after the loss to ask, so check that deadline with HR first.

If your employer does offer a plan, compare it with the Marketplace before you choose. An offer that counts as affordable and meets the federal minimum value standard usually rules out a Marketplace tax credit for you. Ask HR for the numbers. When you enroll through work, our guides to enrolling in a work plan walk through the forms and waivers.

If you miss every window, you generally wait for Open Enrollment, which usually runs November 1 through January 15 on the federal Marketplace, and some states run their own dates. To have coverage start January 1, enroll by December 15. Medicaid takes applications all year. Whether you qualify depends on your income and your state.

Can you stay on health insurance after 26?

Usually not as a dependent. Federal rules require plans that cover children to keep them until 26, and some states set a later age for certain plans, but that’s the end of the line on most job-based plans. Two options can stretch the timeline. A parent’s Marketplace plan can keep you on through December 31 of the year you turn 26. And if the parent’s employer plan is subject to COBRA, aging out lets you keep that same plan for up to 36 months, at up to 102 percent of its full cost.

COBRA has its own notice rule. You or your parent generally have 60 days to tell the plan that you’ve lost dependent status, and federal COBRA applies to employers with 20 or more employees, while many states have similar rules for smaller ones. It keeps your doctors and your deductible progress, but no tax credit applies, so compare it with a Marketplace plan the same way you would any other option.

How do metal levels and deductibles work?

Metal levels describe how you and the plan split costs, not the quality of care. On average, a bronze plan pays about 60 percent of covered costs, silver about 70, gold about 80 and platinum about 90. The trade-off is timing. Lower levels usually have lower premiums and higher costs when you use care, and higher levels work the other way around. If your income qualifies, silver plans can come with extra savings that lower your deductible and copays, and those savings only come with silver.

Catastrophic plans are a fifth option for people under 30. They carry very high deductibles and can’t be paired with the premium tax credit, so if you qualify for the credit, a bronze or silver plan may be the better value.

Read two numbers together. The deductible is what you pay for covered care before the plan starts sharing costs, though preventive care is covered before it and many plans cover some visits before it too. The out-of-pocket maximum is the most you pay for covered, in-network care in a year; deductibles, copays and coinsurance all count toward it, and premiums don’t.

Here’s how they interact on a made-up plan: a $4,000 deductible, 20 percent coinsurance after that, and an $8,000 out-of-pocket maximum. Say a covered, in-network hospital stay comes to $30,000 after the plan’s negotiated discount. You’d owe the $4,000 deductible plus 20 percent of the remaining $26,000, which is $5,200, but the out-of-pocket maximum caps your share at $8,000. The plan pays the other $22,000. For the rest of the plan year, it pays covered in-network care in full.

That $8,000 is the worst case for covered, in-network care, so compare it across plans alongside the premium. A plan with a low premium and a high out-of-pocket maximum asks you to carry more of the risk in a hard year.

What should you check before you enroll?

A common surprise with a first plan is a doctor or a prescription that isn’t covered. Run these checks on every plan on your shortlist:

1. Look up each doctor in the plan’s provider directory, then call the office and ask whether they take that exact plan, not just the insurance company.
2. Check the network type. Many Marketplace plans are HMOs or EPOs that cover out-of-network care only in emergencies.
3. If you live somewhere other than your parents, or split time between two places, check the network where you actually live.
4. Find every prescription on the plan’s drug list and note its tier and any prior authorization or quantity limit.
5. Confirm your usual pharmacy is in network.
6. Write down the deductible, the out-of-pocket maximum, and whether primary care visits and generic drugs are covered before the deductible.

How does your income affect the tax credit?

The premium tax credit is based on the household income you expect for the year you want coverage, your household size, and the cost of a benchmark silver plan where you live. Last year’s income doesn’t matter. The credit is settled on your tax return, so an estimate that’s too low comes back as tax owed, and one that’s too high comes back as extra credit when you file. You can see the credit on real plans when you compare Marketplace plans.

Say you finish a graduate program, turn 26 in June, and start a job in September that pays $60,000 a year. Your estimate counts what you’ll actually earn this calendar year: about four months of that salary, plus anything you earned earlier in the year. If the new job offers coverage that counts as affordable, the credit stops for the months that offer is open to you. Report the offer when you get it.

Two more things change the answer. If a parent will claim you as a tax dependent for the year, you can’t claim the credit yourself, so settle that with them and a tax professional before you apply. And if your income for the year is low, you may qualify for Medicaid instead, depending on your state; the same application checks.

When your parent’s end date is confirmed, compare plans with your tax credit applied and narrow the list to two or three. We’ll check each one against your doctors and prescriptions before you enroll.