The first letter arrived two months ago. The tone was polite and the message was clear: as soon as I turn 26 years old, I'll "age out" of my parents' health insurance plan and won't be eligible for coverage with their employers.
My birthday is now less than three weeks away and -- as I decide how I want to celebrate with friends and family -- there's something else I need to decide as well. What am I going to do about my health insurance?
Well, I'm happy to report that the world isn't ending! Here's everything I've learned about turning 26 under the Affordable Care Act (ACA) and what it means for health insurance coverage.
Coverage lasts until the end of the month (and maybe longer)
If you're about to turn 26 years old (or you know, just turned 26) then you might be relieved to learn that your current health insurance coverage lasts until the end of your birthday month. So if your birthday is November 1st, you'll have coverage until November 30th.
My birthday falls in the middle of the month, so I'll remain on my parents' plan for an additional two weeks after my birthday. It's not much - but there's a lot I can get done in those extra few weeks.
Some plans may even allow you to be covered through the end of the year in which you turn 26, so be sure to find out all of the details if you're finding yourself in the same situation as me.
You can extend coverage through COBRA
Once you turn 26 years old, you may be eligible to purchase temporary extended health insurance on your parents' health insurance plan for up to 36 months through the Consolidated Omnibus Budget Reconciliation Act (COBRA). In order to qualify, you parents' plan must be sponsored by an employer with 20 or more employees and must be COBRA-eligible.
To elect COBRA, you have to notify your parents' employer within 60 days of turning 26 years old, and the notification must be in writing. Here's how it works: if you elect COBRA, you'll have access to the same health plan that you had before you turned 26 years old. But because your parents' employer is no longer subsidizing your health care, you'll be responsible for 100% of the plan's full cost, plus an admin fee of up to 2%.
It's a qualifying life event (QLE)
Loss of health coverage is considered a qualifying life event. Because you'll lose coverage on your parents' health insurance plan when you turn 26 years old, aging out counts as a QLE.
This means that you will be eligible for a Special Enrollment Period that allows you to enroll in health insurance outside of the annual Open Enrollment Period. If you or your spouse have an employer that offers health insurance benefits, this means that you'll be able to enroll in health insurance benefits once you turn 26.
It also means that you'll be eligible to shop for coverage through your state's health insurance marketplace. There are a few things you might want to remember though:
- The Special Enrollment Period must be requested within 30 days of your loss of coverage. Once it has been requested, you will typically have 60 days to enroll in a plan. If you miss the Special Enrollment Period, you'll have to wait to enroll until the next open enrollment period.
- You might need to produce proof of the qualifying life event. This is usually a letter from your parents' employer or your previous health provider stating that coverage has ended due to age.
This is a great time to reevaluate your health insurance needs. If this is the first time you've ever had coverage through an employer, then it might be a good idea to look at the various health insurance options—including flexible spending accounts and health savings accounts. Whether or not you are allowed to make mid-year changes is ultimately up to your employer, but it doesn't hurt to check.
In many ways, my 26th birthday came at the perfect time because I recently started a full-time job with health insurance benefits. But whether you're employed, unemployed or somewhere in-between it's always a good idea to know your options. And if you're looking for health insurance, you can start by checking out your state's health insurance marketplace.
Whether it's for covering medical expenses, or planning bigger investments, our Future Healthy column will help support your path to retirement, no matter where you are on the journey. And for the latest info about your health and financial wellness, be sure to check out our HSA Learning Center, and follow us on Facebook and Twitter.