Health insurance for 26-year-olds explained

A lot can happen in your 20s—new jobs, education, and maybe even moving into your first apartment or house. But one key life event occurs when you turn 26: you may lose access to your parents’ health insurance. Which means it’s up to you to choose and buy your own plan.

Why does turning 26 matter?

The Affordable Care Act requires health insurance plans to cover adult children until they reach 26 years old. This gives young adults who are getting an education, finding a job, and figuring out their next steps some time to stay covered without added stress, according to Department of Labor.1

If your parents claim you as a dependent, you can usually stay on their health plan until you turn 26. If they have a Marketplace plan, that coverage typically lasts until December 31 of that year.  If they’re on a plan from their employer, your coverage usually ends at the end of the month you turn 26.

Types of health care plans

When you turn 26 and need to purchase your own health insurance plan, it’s important to know you have options. 

Employer-sponsored or job-based health plans

Employer-sponsored insurance is health insurance offered through your job. Your employer may purchase a group policy from an insurer and typically pays part of the premium. People who are on a health plan they get through work often have lower deductibles and copays than other plan options.  

Marketplace plans

Marketplace plans are private health insurance plans you buy through the government’s Marketplace. Depending on your state, you may sign up on the federal website or your state’s website. 

You get to choose the plan type and the insurer, but you are responsible for the monthly premium. Lower premiums may be available through subsidy programs. With employer plans, your premium usually comes out of your paycheck. 

Marketplace plans are often a good fit if you’re self-employed, if your employer doesn’t offer health insurance, or if your employer’s offered insurance coverage doesn’t meet certain requirements.

Basic health insurance terms every 26-year-old should know

It’s a good idea to understand what these health insurance terms mean so you can better understand your health plan costs.

Copay 

A copay is a fixed amount you must pay the doctor for services. Most plans have lower copays for primary care providers and higher copays for secondary care providers.

Deductible 

A deductible is an amount you must pay to doctors and facilities before your plan begins to pay for eligible charges. Some categories of benefits may have a separate deductible.

Coinsurance 

Coinsurance is a percentage of the charges you must pay from a provider or facility for covered services.

In-network 

A network is the group of providers and medical facilities in your area. If a doctor or provider is in-network, they are contracted with your insurance to charge an agreed-upon amount for services. 

Out-of-network 

Providers that don’t participate in your plan’s network and do not accept the insurer’s allowed amount are considered out-of-network. If you still choose to see that provider for care, you may have to pay their full amount.

Premium

A premium is the monthly bill you pay for insurance coverage. 

Preventive care

Preventive care may include routine checkups, screenings, vaccinations, and counseling for staying healthy. This care is often covered at no or low cost when you use an in-network provider.

Subsidized coverage

Subsidized coverage is reduced or low-cost health coverage for people with lower-incomes 

Important deadlines and enrollment rules

If you age out of your parents’ insurance plan at age 26, you may be eligible to apply for your own insurance during a special enrollment period. This is a time outside the yearly open enrollment period when you can sign up for health insurance. 

You've usually got 60 days to enroll

You may qualify for a special enrollment period if you experience certain life changes.2 Some eligible changes may include:

• Losing health coverage you had through a family member
• Moving to a new home in a new ZIP code or country 
• Getting married
• Having a baby
• Adopting a child

Though it depends on the reason for your special enrollment period, you usually have 60 days after the life change to enroll in a plan.  

If you are eligible, you can enroll in Medicaid or the Children’s Health Insurance Program (CHIP) any time.

How to choose the right plan at 26

Choosing the right insurance plan for you depends on your medical needs and budget. If you see a doctor regularly, take prescription medications regularly, or anticipate medical needs in the next year, it may be a good idea to look into a plan that has a higher monthly premium and a lower deductible. This means insurance will cover more procedures and costs sooner since your deductible is lower.

If you rarely go to the doctor, don’t take any medications, and don’t anticipate any health changes coming up, a high-deductible health plan (HDHP) could be a good fit. These plans have lower monthly premiums and higher deductibles. 

HDHPs are also eligible for a health savings account (HSA). With an HSA, you can take pre-tax dollars out of your paycheck or account and deposit them into a savings account made specifically for medical needs. These savings can help offset costs if a medical need arises and you haven’t met your deductible.

If you’re not sure what plan is right for you, talk to one of our agents at 855-442-0220 (toll-free). They can help you figure out your needs, budget, and what options you have.

We’re here to help

If you’re turning 26 or just turned 26, insurance can feel overwhelming. We’re here to help. You can check out our individual plans to browse your options, or you can call 855-442-0220 (toll-free) to get personal help.

Sources

1. Young Adults and the Affordable Care Act: Protecting Young Adults and Eliminating Burdens on Businesses and Families FAQs, U.S. Department of Labor

2. Special enrollment opportunities, Healthcare.gov