Young workers in their first full-time jobs may face a decision that Americans didn’t have years ago: whether to enroll in a health insurance plan offered through their employer or stay on their parents’ policy.
It’s a choice that’s possible because the Affordable Care Act, the landmark health law passed in 2010, generally allows young adults to stay on their parents’ health plan until age 26. The option is available even if they have jobs that offer health coverage, are married or don’t live with their parents.
Health coverage can be complex, so opting to stay on your parents’ plan isn’t necessarily a simple decision. “Like everything else with health care, evaluating insurance options is just extremely annoying,” said Dan Weissman, host of “An Arm and a Leg,” a podcast focused on the cost of health care.
Martha Sanchez, director of health care policy and advocacy at Young Invincibles, a group focused on young adults, said people who were early in their careers might find themselves changing jobs often, so it could be simpler to stay with a plan they know, rather than switching to a new employer’s offering.
“It’s just easier to not go through the hassle,” she said.
But you also shouldn’t assume you’ll stay on your parents’ plan, Ms. Sanchez said, adding that it was “really up to the parents.”
Depending on the details of the coverage, your parents may be able to save money by dropping you from their own job-based plan. Insurers typically base premiums on tiers of health coverage — for instance, one rate if just the employee is covered, a higher rate for both the employee and a spouse, and an even higher rate for family coverage, which includes children. If you don’t have siblings who are also covered by your parents’ plan, they could pay less by dropping you from their health coverage.
If, however, there are other siblings on your parents’ policy, removing you might not change their premium anyway, so it might make sense for you to remain covered. Whether or not they ask you to chip in to help cover expenses — perhaps by paying your out-of-pocket costs — is a subject for family discussion.
(If your parents’ coverage is instead through Healthcare.gov, the federal insurance marketplace, it’s usually best to enroll in your own job-based insurance. If you qualified for affordable employer coverage, you would be ineligible for subsidies that help lower the cost of marketplace plans, so the cost to the family would increase, health experts said.)
Mr. Weissman, the podcast host, recommends comparing key aspects of each option offered by your employer — there may be different plans with varying costs — with those of your parents’ plan.
First, check what monthly premium you would pay. The average annual premium for individual health coverage paid by employees in 2023 was about $1,400, or $117 a month, according to KFF, a nonprofit health research group.
Next, look at other out-of-pocket costs, including co-payments, also called co-pays, the fixed fees you may pay when visiting a doctor, as well as deductibles, the amount you must pay for care before your insurance pays. Co-pays may or may not count toward your deductible, depending on your plan. (For a fun insurance lingo explainer, check out this video.)
Under the Affordable Care Act, certain types of preventive care — including immunizations, cancer screening tests like Pap smears and counseling to quit smoking — are covered free of charge. But you’ll typically have to pay for other types of care until you meet your deductible. The average annual deductible for individual job-based coverage in 2023 was $1,735, according to KFF.
Even after you meet your deductible, you’ll usually still pay a share of the cost — often 20 or 30 percent — up to the out-of-pocket cap (in 2024, no more than $9,450 for most health plans, for care within your plan’s network).
Pharmacy coverage is another consideration, especially if you take certain prescriptions regularly. Each plan has a list of covered drugs called a formulary; check to see if the plan covers the specific medication or medications you need.
The network of doctors and hospitals included in your plan also matters. If you have a chronic condition and have a longtime doctor through your family’s plan, but you’d have to change physicians with your employer’s plan, “staying put could be beneficial,” said Sabrina Corlette, a research professor at the Center on Health Insurance Reforms at Georgetown University.
You’ll want to make sure you have access to doctors near where you live. If your parents’ plan has nationwide access, that might work fine. But if it’s an H.M.O. in Los Angeles, while you’ll be living in New York, local care through your employer’s plan makes more sense, said Louise Norris, a health policy analyst at Healthinsurance.org, an online information and referral site.
“There’s no right or wrong answer,” she said. “It depends on your specifics.”
Here are some questions and answers about choosing a health plan as a young adult:
Can I be covered by both my employer’s plan and my parents’ policy?
Yes, but it’s generally not recommended. With dual coverage, the health insurance through your job is considered your primary coverage, and your plan under your parents’ coverage is secondary. Your employer plan would pay costs first, and your parents’ policy could pay for some costs, such as deductibles, that your primary health insurance didn’t cover.
However, coordinating two policies — possibly with different provider networks and deductibles — can be challenging, and it gives insurers an opportunity to argue over who should pay what, possibly delaying payment of claims.
“It creates many more problems than it solves,” Ms. Corlette said. “My general advice is to avoid it if you can.”
You’ll especially want to avoid dual coverage if you choose a high-deductible plan through your employer, with a special tax-advantaged health savings account, or H.S.A., as your main coverage, said Dr. Jeff Levin-Scherz, population health leader at WTW, a benefits consultant. Such plans allow you to contribute money pretax to the H.S.A., where it can grow tax-free. But having secondary coverage could disqualify you from those tax perks.
If I’m on my parents’ plan, what happens when I turn 26?
You’ll be eligible for a special enrollment period. That means you can sign up for coverage through your job, without having to wait for the plan’s annual open-enrollment window. Check with your employer for details well in advance of your birthday, to make sure the change goes smoothly.
What if I don’t have access to job-based health coverage when I turn 26?
Check out plan options on Healthcare.gov, the federal health care marketplace, or its equivalent in your state. (If your parents have marketplace coverage, you can stay on their plan until the end of the year that you turn 26.) Depending on your income, you may qualify for tax credits and financial help that can significantly lower your costs. (A handful of states allow young adults to stay on some insurance plans until around age 30 if they meet certain criteria.)