If you're the parent of a child nearing age 26, you may be focused on helping your young adult finish school or handle the pressures of a newly launched career. But another milestone may be sneaking up on both of you: the end of that child's eligibility for coverage under your employer-sponsored health insurance plan.
The Affordable Care Act (ACA) generally requires health plans that offer dependent coverage to make it available until a child turns 26. (Some plans allow longer coverage.) The rules governing precisely when coverage ends — and when young adults must enroll in their own plans — can be tricky. Here are answers to some common questions that parents ask as they help their young-adult children manage this important transition.
The ACA doesn't require plans to end coverage on an individual's 26th birthday. Rather, the termination date depends on each plan's specific rules. Widely used end dates include:
Because there's no universal rule, confirm the exact termination date of your employer's plan with the benefits administrator. Assuming coverage lasts longer than it actually does can lead to an unexpected lapse.
If your child has a job with employee benefits, you may want to encourage them to apply for coverage under their employer's health plan. But the question is: When?
Dependents "aging off" their parents' plans generally qualify for a special enrollment period under their own employers' plans, provided they're otherwise eligible for coverage. This enables them to apply outside the usual open enrollment window. However, timing matters. Federal rules generally require applicable employer-sponsored plans to allow at least 30 days after the loss of other coverage for a special enrollment request. Some plans permit longer periods.
In this case, the qualifying event is the date your employer's plan coverage ends — not necessarily your child's birthday. For example, if your plan terminates coverage on November 30, 2026, your child generally has until December 30 to request special enrollment under their employer's plan. But coverage under the new plan generally will begin no later than the first day of the month following the enrollment request. Thus, waiting until December to enroll could mean coverage doesn't begin until January 1, 2027.
Although the special enrollment period may begin on the termination date, some employers' plans let employees start the enrollment process before their existing coverage ends to ensure a smoother transition. This is a highly favorable feature — especially when the termination date is on the birthday itself.
If your child waits until their birthday to enroll, a "coverage gap" may occur. That is, they may have no health coverage until their employer's plan becomes effective. Some employers' plans may also process enrollments only on certain dates or require documentation of lost coverage. In addition, delayed enrollment may require adjustments to premium deductions or result in larger deductions from subsequent paychecks.
For these reasons and others, it's generally best for your child to begin coordinating replacement coverage well before your plan's age-26 termination date. When they can do so depends on their employer's plan. Some permit advance enrollment requests; others require employees to wait until the qualifying event occurs.
Of course, not every 26-year-old has access to an employer-sponsored health insurance plan. Many are in graduate school, working part-time, freelancing or between jobs.
In such cases, an ACA Health Insurance Marketplace (often referred to as an "exchange") becomes an important potential coverage source. Losing dependent coverage upon turning 26 generally triggers a special Marketplace enrollment period outside of the usual annual open enrollment window. This period generally runs from 60 days before through 60 days after the coverage loss. When a young adult selects a Marketplace plan before losing existing coverage, the new coverage generally can begin the first day of the month after the old coverage ends. Waiting to enroll until after the loss of coverage can create a gap.
Marketplace plans can be more affordable than you might expect. Under the ACA, some young adults may qualify for premium tax credits, depending on household income, tax-filing circumstances and access to other coverage. Medicaid could be an option, depending on income and state eligibility rules.
Lower-premium "catastrophic" plans may also be available for those under 30. However, these plans typically come with high deductibles. Student health plans may be another option for those attending college or graduate school.
Generally, private-sector employers with at least 20 employees may be subject to the Consolidated Omnibus Budget Reconciliation Act (COBRA). This federal law requires certain group health plans to offer qualified beneficiaries temporary continuation coverage after specified qualifying events.
One such qualifying event may be when a dependent turns 26 and loses eligibility under a parent's employer-sponsored plan. In this case, your employer may have to offer COBRA coverage that keepsyour child on its plan for up to 36 months. However, COBRA comes with a major catch: Employers generally aren't required to continue subsidizing premiums. Young adults may have to pay the full cost of coverage, plus an administrative fee of up to 2% — potentially making COBRA much more expensive than other options.
For this reason, COBRA may be attractive only under certain circumstances. For example, it can help when a dependent needs uninterrupted access to specific medications or is in the middle of treatment with specialists who might not participate in another plan's provider network.
Even if COBRA is an option, it doesn't eliminate the need for a soon-to-be former dependent to compare available coverage options and their enrollment deadlines carefully. Employer-sponsored plans are often less expensive than COBRA because employers typically contribute toward premiums. However, Marketplace coverage may still be worth considering.
Sometimes COBRA provides a bridge option when employer-sponsored or Marketplace coverage can't begin immediately. When available, it has a 60-day election window that begins on the later of the date coverage ends or the date the COBRA election notice is provided. Coverage generally can be retroactive to the date your plan's coverage terminated.
However, your child must elect COBRA coverage and pay the premiums. Also, you (or your child) generally must notify the administrator of your employer's plan when your child loses dependent eligibility, following the plan's notification procedures and deadlines.
Because coverage start dates and enrollment rules vary by plan type, the safest approach is to start exploring your child's options at least 30 to 60 days before their 26th birthday. Fortunately, that's a date you no doubt know quite well.
With a little planning, you and your child can work together to transition from dependent coverage to independent coverage in a smooth and timely manner. Contact your financial advisor for help evaluating the financial implications of your child's health coverage options.
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