When you turn 26, you are no longer eligible to stay on your parents' health insurance plan. If you're turning 26 soon, or have parents who qualify for Medicare before you turn 26, you will need to find alternative health coverage.
Under the Affordable Care Act, all Americans are required to have compliant health insurance for most of the year or face a tax penalty. Healthcare.gov explains what you need to know about getting different coverage once you age off your parents' plan.
Why You Need Insurance
Many healthy young adults tend to think that the need for health insurance is unnecessary, or not worth the trouble, but this is inaccurate. Unforeseen illness and accidents happen all the time, even to the healthiest of people.
The costs of an ER visit or doctor bill can quickly add up, often far exceeding what it costs to get insurance. Also, the penalty for going uninsured in 2016 is $695 per adult, or 2.5% of your income, whichever is higher.
You can avoid costly medical bills and the ACA penalty by ensuring you maintain health coverage after you age out of your parent's plan.
Embracing Adulthood: What to Do When You've Aged out of Your Parents' Health Insurance Coverage
With this extensive guide on the ACA, you can prepare for when you turn 26 by learning about the following:
- How to assess your situation
- Insurance plan options (further options can be found on HealthCare.gov)
- A breakdown of the ACA
- Short-term solutions
How Short Term Medical Can Help
Short-term medical (STM) plans are limited-benefit health insurance plans designed to cover you for short periods, until you secure long term insurance. STM is designed to cover short gaps in medical coverage, such as:
- Waiting on open enrollment coverage start dates
- Waiting for employee benefits for a new job
- Recent college graduates who may be unable to take advantage of ACA parental insurance benefits
Note: STM plans are not fully compliant with the ACA. Since they do not meet all of the essential benefits of an ACA-compliant plan, STM policies are better suited as complementary coverage to an ACA plan. You will still have to pay a fee if you do not seek long-term insurance at any time during the year. If you are uninsured for no more than two consecutive months, you do not have to pay a fee.