If you’re coming up on your 26^th birthday and are currently covered under your parents’ health insurance coverage, it’s time to do some planning. The same goes for parents who have children in that situation.

Why? Because, after turning 26, individuals cannot be included as dependents on parental health insurance plans. That benefit is a key aspect of the Affordable Care Act and helps many families extend coverage to their children until they’re in a position to take on their own insurance. In fact, it’s been reported that 6.1 million young adults opted to remain on their parents’ coverage between 2010 and 2016.

Unfortunately, the importance of health insurance is often overlooked by many young people. The U.S Department of Labor has said that the uninsured rate among employed young adults is one-third higher than it is for older employed adults. Also, one in six young people suffer from a chronic condition like diabetes or asthma. And about half of uninsured young adults have had difficulty paying their medical expenses.

Guidelines to Remember

When aging out of parent coverage, an important consideration is to check out whether that coverage ends the day a person turns 26, extends through the last day of their birth month, or can remain in place until the end of that year.

Hitting 26 and losing parental health insurance is a “qualifying life event.” These events allow a person to obtain coverage outside of the standard, annual Open Enrollment period by requesting a Special Enrollment Period. Coverage can then be obtained through an employer, through a state health insurance exchange or on a personal basis.

The Special Enrollment Period establishes a timeframe of 120 days (60 before the birthday and 60 afterwards) during which enrollment in a new plan can take place. If insurance isn’t in place during that period, the individual may have to wait until the next open enrollment.

Also, keep in mind that it’s often necessary to enroll by the 15^th of a given month for insurance to take effect on the first of the following month.

Options to Consider

If the person is currently working, the easiest option may be to simply shift to the coverage offered by their employer. This would require the least amount of research and may be most cost-effective.

Another option is to buy extended, temporary coverage under the parent’s plan through what’s known as COBRA. That coverage can last for up to 36 months. However, the parents’ coverage must be through an employer with at least 20 employees, and it has to be COBRA-eligible. The employer must be notified in writing within 60 days of the individual turning 26.

So be sure to find out whether or not this is possible. And be aware that, even though it’s related to the parental coverage, the individual will be obligated to pay the plan’s full cost. It may turn out that the parents’ coverage is simply more than is needed for a healthy young person and another option might be more affordable.

A third way to go is to obtain coverage through a health insurance marketplace or exchange under the Affordable Care Act. These exchanges offer five tiers of insurance from which to choose a plan with the appropriate mix of coverage and cost.

Limited coverage can be obtained through catastrophic health insurance. These plans require a “hardship exemption” which can include situations like homelessness, serious financial difficulties, death of a family members and several others. Coverage is usually limited to emergency care and perhaps some preventative care.

Another option may be qualifying for Medicaid based on income if the state of residence provides it.

Don’t Procrastinate

“Going bare” when it comes to health insurance is not a wise choice. You don’t want to get caught in a gap between coverage and incur serious, unexpected medical expenses. There are a number of important considerations to understand and take into account to make an informed decision about the available options.

So think ahead. Do some research. Be ready when the time comes. You’ll not only have more peace of mind, but you’ll likely end up with the best coverage for your needs.

At KeenanDirect, we can help those turning 26 sort out their options with free health plan education, rate comparisons and tailored plans.