It might be time to take adult kids off the family health plan

  • Adult children can stay on a parent’s insurance plan through age 26, but that might not be the best option for care.
  • Here is what health insurance experts say to consider when choosing your first health insurance plan.
A healthcare specialist helps people select insurance plans at the Affordable Care Act Enrollment Fair at Pasadena City College in Pasadena, California.
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A healthcare specialist helps people select insurance plans at the Affordable Care Act Enrollment Fair at Pasadena City College in Pasadena, California.

Your child has graduated college, moved to a new apartment or a different city and is starting her first real adult job. You’re done paying for tuition, rent and food. So, when is it time to stop paying for health insurance?

Adult children up to the age of 26 can stay on a parent’s health insurance plan, due to the Affordable Care Act. Plans and issuers in the individual market as well as employers are required to offer dependent coverage for married and unmarried children. This decreased the uninsured rate among 18 to 34-year-olds by over 10 percent from 2010 to 2015, according to the American Community Survey.

Yet, just because this a possibility doesn't mean that it is the best choice for adult kids, or their parents.

"You’re doing yourself a disservice if you don’t at least look at the options that are available to you," said Kim Buckey, vice president of client services at DirectPath, a benefits management company.

You need some coverage

It might be tempting for young adults to skip health insurance. They might think that they’re invincible, or that they can save money by not paying for coverage and not paying a penalty.

While the Trump administration did do away with the penalty for not having health insurance coverage, that won’t go into effect until after 2018, meaning that the first time people filing their taxes won't have the penalty is 2020, said Louise Norris, a writer for Healthinsurance.org and Verywell.

Regardless of the penalty, going without health insurance is never a good idea, according to Buckey from DirectPath. Attempting to skirt the cost could lead to astronomical medical bills if you do have an emergency.

“All you need is one broken arm or one really bad case of the flu,” Buckey said. “and it becomes painfully clear why you should’ve had coverage.”

Your parent’s plan might not be cheaper

Adult children have a couple of options for finding their own insurance. They can continue coverage with COBRA, join their own company’s health insurance plan if they are employed and one is offered, or shop for their own individual plan in their state’s marketplace.

There are a few things that adult children should consider when deciding between staying on a parent’s plan and having their own. The first is the potential cost. It might not be cheaper to stay on a parent’s plan, and if it is, you might be sacrificing coverage, said Norris.

"All you need is one broken arm or one really bad case of the flu and it becomes painfully clear why you should’ve had coverage." -Kim Buckey, vice president of client services at DirectPath

“It’s common for employers to cover a lot for the employee but less for the kid,” said Norris from Healthinsurance.org. Especially if you’re over the age when insurance plans start charging the adult rate, your parents might be paying quite a bit to cover you, Norris said.

There are some caveats. If you have younger siblings on a family plan, your continuing on the plan might not change the cost. Experts say the best course of action is to talk with your parents and encourage them to ask human resources or the insurer the details of the plan.

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“I don’t think anyone would disagree that benefits are confusing,” said Buckey of DirectPath. She said to look at what support is available and try to list out the costs associated with each plan to do an apples to apples comparison.

It’s time to start ‘adulting’

“There’s something to be said for biting the bullet and starting to learn about health coverage,” said Buckey. The more you experience it for yourself, the more inclined you are to be a better healthcare consumer, she said.

“When it’s your money, you’re more careful and making sure you’re making the best decisions for yourself,” Buckey said.

Other considerations that are important for adult children are their location relative to their family and their desire for privacy. If they live far away from parents, much of their care on a family plan may be out of network.

In addition, adult kids should realize that if they are on their parent's health insurance, it means the parent is likely receiving notifications about medical visits.

“If you would rather have more privacy on those matters, it may be time to get your own health insurance plan,” said Penny Gusner, consumer analyst at Insure.com.

Have the talk

There is no blanket statement that applies to all health plans. What is most important for families as they make health insurance decisions with adult children is that they have an active conversation about coverage.

“That ends up being a negotiation not unlike when the adult son or daughter is still living at home,” said Mark Hamrick, senior economic analyst at Bankrate.com. “What is their responsibility to pay for? How much should they be saving for future expenses so they can be successful living independently?”

If you’re an adult child looking to obtain your own health insurance and are confused, ask for help. Other than your parents, there are resources from your employer and your state exchange that will help you find the best health insurance plan for you.

Here are some basic health insurance pointers to remember as you're selecting and navigating your first plan, from DirectPath.

1. Remember that preventative care is free

Typically, annual checkups and some vaccinations are covered at no charge. The best way to keep healthcare costs low is to stay healthy.

2. Pay attention to deadlines – you can’t change your mind

Annual enrollment periods only last a few weeks, and there is generally a window of about 30 days in which you can change your selection for coverage. After that, you’re stuck with the plan you chose for a year.

3. Keep up to date with your coverage

Many people have a “set it and forget it” mentality when it comes to health insurance, Buckey said. But, over time your needs have probably changed and there might be a better plan out there for you. She says to take time to review your options every year.

4. Learn how to discuss cost with your doctor

Doctors are not insurance experts. If cost is a concern for you, bring it up in your appointments with your physician. They may be able to help keep costs low or help you determine what your plan covers.

5. Shop around for the best option

Prices for different procedures and drugs vary. Ask for generic drugs if available, or see if your doctor has samples that you can try if they’d like you to start a new prescription.