College, Turning 26, and Other Dependent Changes That Impact Healthcare Costs and Coverage
What should you consider for your child's healthcare as they age?
You’re likely already aware that turning 26 is a life event that impacts healthcare coverage, but did you know that going to college and getting a job are also life events that can impact your and your dependent’s healthcare costs and financial planning?
College
While some students have access to coverage through a parent’s plan, there will likely also be an option to enroll in a student health insurance plan offered through the institution. It can be confusing to decide which insurance option makes the most sense.
Student health insurance is commonly offered and may be packaged into tuition costs. Institutions typically also offer separate plans for coverage. All student insurance coverage must be compliant with the Affordable Care Act (ACA). Thus, to waive coverage, the coverage under another plan instead of plans offered by the institution must also be ACA-compliant.
To determine the best option, it’s important to understand how the college’s or university’s health insurance is structured and evaluate all the options against your dependent’s healthcare needs.
When evaluating a student health plan, compare the annual fixed costs (total monthly premiums) of their current coverage against the plan offered by the institution. Then, factor in the possible out-of-pocket costs into the comparison to find out the most your student might pay in a given year.
If you decide to keep your current coverage for your dependent, you’re entitled to waive the student plan by submitting the required documents to the institution. Waiver deadlines are often dependent on the academic calendar but the waiver process typically occurs at the beginning of each semester or quarter. For dependents who are covered under a parent’s plan, under the ACA they can stay on the plan until they turn 26.
Another option is to go through the Marketplace. These plans may be less expensive than student insurance. Students may also get coverage through Medicaid if they qualify as low-income and meet the state’s eligibility requirements.
A few things to keep in mind are also where the college is located, the plan type, continued eligibility, and summer coverage.
Location
If your dependent is attending an out-of-state school, you will need to consider the provider networks available with your health insurance options. For instance, if a plan requires referrals from a primary care provider, you might want to look for a different doctor closer to your dependent’s school. State licensing can also impact availability. For example, if your dependent is planning to go to an out-of-state school and access mental health services with their provider from home, you’ll want to check if the provider is licensed in the new state.
Plan Type
Related to the above is the plan type, meaning if it is a PPO, HMO, or EPO. Your dependent will need to check for provider network coverage under your plan, especially if their school is in a different state. If their doctors aren’t in-network with their plan’s coverage, they might want to switch to a plan that has access to their providers to assure coverage at an optimal cost. If they change their legal residency, this is considered a qualifying life event, which allows them to make plan changes outside of Open Enrollment or when the semester or quarterly coverage ends.
Continued Eligibility
Some student plans require enrollment in a certain number of units or credit hours to be eligible for coverage. This is something to keep in mind in case your dependent is thinking of going part-time or taking time off from school.
Summer Coverage
Some colleges offer summer coverage, even if the student isn’t enrolled in classes. Pay attention to the deadlines to enroll though, otherwise, you might miss the window for coverage. If your dependent loses coverage over the summer, they might qualify for a special enrollment period to enroll in an ACA-compliant plan on the Marketplace. Voluntarily dropping a student plan is not considered a qualifying event.
Turning 26
Under the Affordable Care Act, health plans are only required to cover the policyholder’s dependents until they turn 26. Before the ACA, most health plans kicked dependents off their parent’s health plans once they reached the age of 19 or stopped attending school full-time. If your dependent is covered under your employer policy, they have until the end of the month that they turn 26 to choose a new health insurance plan. So, if your dependent turns 26 on May 4th, they have until May 31st to find new coverage. However, it’s always best to act sooner rather than later to avoid any potential gaps in coverage. If they receive coverage under your ACA Marketplace plan, they have until the end of the calendar year, December 31st, before their coverage ends.
So, when your dependent ages off of your policy, what are their options?
Well, for starters, this is a life event that qualifies as a Special Enrollment Period. Meaning that your dependent is eligible to enroll in a Marketplace plan no matter what time of the year they turn 26. Enrolling in a Marketplace plan is a good option if your dependent is not eligible to receive employer-sponsored coverage through their job. You can schedule a meeting with me to help you and your dependent identify if they qualify for a premium tax credit to make their Marketplace health insurance premium more affordable.
Aside from the Marketplace, other healthcare coverage options for people who have aged off their parent’s policy are:
Employer-sponsored healthcare coverage
COBRA
Student health plans
Medicaid coverage
After getting your dependent’s healthcare coverage figured out, it’s time to assess your own coverage. Now that one less person is on your health plan, this could affect the cost of your health plan. Your current health plan might not be the optimal choice anymore either. Let’s say your dependent has a chronic condition that required frequent medical appointments, so you opted for a low-deductible health plan with higher monthly premiums. If you’re in relatively good health and want to pay less each month on your health plan, you might want to consider enrolling in a high-deductible health plan with lower monthly premiums. My clients have access to healthcare planning software through our partner Caribou, so you can complete a HealthPlanning Analysis to identify the optimal health plan choices for you based on your health needs, preferences, and financial goals.
First Job
Let’s say your dependent gets their first full-time job before the age of 26 and is eligible for healthcare coverage through their employer. What should they do? Should your dependent enroll in their employer’s coverage, or should they stay on your plan until they turn 26? Well, it depends. This is a great opportunity to have a conversation with the whole family about your financial goals, healthcare needs, and preferences. Through a HealthPlanning Analysis, you can compare plan options to see which offers the best combination of optimal coverage, costs, provider network, etc.
Final Thoughts
These are all exciting milestones for you and your dependent, but in the excitement, don’t forget to consider how your dependent’s healthcare coverage (and by extension, your own) might change based on these life events. If you want to ensure you make the best decision possible for your and your dependent’s healthcare coverage, ask me about completing a HealthPlanning Analysis.
Simply reach out to get support for these decisions by getting health plan options tailored to your needs.