If you’re a young professional still trying to navigate this whole adult thing, you may be wondering: Can I still have my parents’ insurance until I’m 30? A few countries they may allow you to do so, depending on your situation. But in most cases, young people can expect to lose their chances as soon as they turn 26.
So, your best bet is to research and start planning before you hit the big 2-6. Here’s what you need to know.
After turning 26, How to Choose Health Insurance?
If you are about to turn 26 and work full-time, your employer may be able to provide you with health insurance. You probably know about open enrollment, which is an annual opportunity for an employee to sign up for benefits that their company can offer with a full-time job – including health insurance. However, turning 26 is considered a “lifetime qualifying event,” which means you’re eligible to enroll for a special period outside of the general enrollment period. Here’s the trick: you only have 60 days to sign up, so it’s best to figure out your plans before your birthday.
Common goals for health insurance listings include a health care organization, a preferred care organization, and a low-cost health plan. Then, depending on the plan you choose, you can also choose to enroll in a health savings account or a savings account.
How to Calculate the Alphabet Soup of Insurance: HMO, PPO, HDHP
What is an HMO?
A health maintenance organization, or HMO, has many plan limits. The plan’s coverage only includes doctors who work with the HMO, and out-of-network care is not covered except in the event of an emergency. If you want to see a specialist, you will need a referral from your general practitioner or if your insurance does not cover the cost. If you expect your monthly premiums to be higher, an HDHP may be right for you.
What is a PPO?
A preferred organization, or PPO, contracts with the health care group you use, such as doctors and dentists. With this plan, you must pay some of the costs of your health care before your insurance will start paying you. This is called a deductible, and out-of-pocket costs vary depending on the plan your company offers. If you want to use a hospital outside of the plan, you have to pay extra.
What is HDHP?
As the name suggests, a high-income health plan, or HDHP, offers a lower premium, which is the amount you pay each month to maintain your coverage, but your deductible is higher. Plans with premiums of at least $1,400 for individuals and $2,800 for families fall under the HDHP category, as defined by the IRS.
On the bright side, people can use an HSA (or in some cases, an FSA) to cover expenses not covered by their plans.
What’s the Difference Between an FSA and an HSA?
A flexible savings account, or FSA, works like a medical savings bank account to pay for out-of-pocket expenses with tax-free dollars. An FSA can be used with any health insurance plan if your employer offers it. However, FSAs come with several restrictions. First, you need to know how much money you want to give at the beginning of the year. By 2021, contributions are limited to $2,750 per year. If your employer makes a contribution, it won’t count towards your election. Second, unused dollars do not roll over.
Read more about FSAs.
If you enroll in an HDHP, you must have a health savings account, or HSA, that both you and your employer can contribute to. You can give, invest, and withdraw dollars to pay for your premiums tax-free. Also, the money goes through every year. However, it is available contribution limits. In 2022, the IRS announced that the annual limit for self-employed individuals is $3,650. For family coverage, the limit is $7,300.
Read more about HSAs.
After I Turn 26, How Can I Choose Health Insurance If I’m Not Working Full Time?
If you work in the gig economy, work part-time, or are unemployed, your health insurance coverage includes:
- Medicaid: People with low incomes may be eligible for this low-cost program through the government.
- The Health Insurance Market: People who have unexpected income sources can apply for plans based on their discretion.
- Consolidated Omnibus Budget Reconciliation Act, or COBRA: People who have been laid off can continue to receive temporary coverage through this program.
Why Do I Need Health Insurance?
After turning 26, health insurance is still required. Medical debt is not selective – it affects both the uninsured and the insured. According to a scholarship from the Kaiser Family Foundation41% of adults carry debt from medical or dental bills.
Make your plans before the big birthday hits you—life can take unexpected turns and come with unexpected expenses. Take the time to explore your options to find a plan that fits your needs and situation.
Here are some tips to help you manage these issues: