Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Oct 27, 2021

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The White House issued regulations this week that will allow young adults to stay on their parent’s employer-sponsored health insurance plans until the age of 26.

The change, which is part of the wider Affordable Care Act (health reform), is intended to assist young individuals who aren’t able to obtain health insurance on their own.

Roughly 30% of young adults are uninsured, three times higher than the uninsured rate among children, and the highest of any other age group.

Additionally, the uninsured rate among employed young adults is one-third higher than older employed adults.

This is the result of young adults having a low rate of access to employer-based health insurance, partially because they take entry-level jobs, part-time jobs, or jobs in small businesses that don’t offer insurance plans.

The current economic turmoil is also likely to take its toll on young adults, as many recent graduates will probably find difficulty finding a job and subsequent health insurance coverage.

The provision was scheduled to go into effect in September, but upon the Administration’s urging, every major insurance company has pledged to provide continuous coverage for young adults throughout the summer.

An analysis found that the cost of adding this provision will only raise family health insurance premiums by 0.7% while allowing 1.2 million young adults to gain coverage under their parent’s health insurance plans or via the individual market.

Young adults typically lose access to their parent’s health care policy at age 19, or age 23 if full-time students.

Before the Affordable Care Act, many health plans and issuers removed adult children from their parents’ policies because of their age, regardless of whether they were a full-time student or where they lived. Now the Affordable Care Act requires plans and issuers that provide dependent child coverage to still offer coverage until the adult child turns 26. So, many dependent children don’t have to worry about losing health insurance coverage after they graduated from college.

Both married and unmarried children qualify for this coverage. This rule applies to all plans in the individual market and to all employer plans. Any person who qualifies for health care coverage must be offered all of the benefit packages and cannot be required to pay more for coverage than similarly situated individuals.

Dependent children won’t have to purchase an individual policy. If adult children meet the eligibility requirements and want to use the coverage up to age 26, they will be included in the parents’ family coverage. Plans or issuers cannot impose limits on who qualifies based on financial dependency, marital status, enrollment in school, and residency.

Under a change in tax law in the Affordable Care Act, the value of any employer-provided health care coverage for an employee’s child is excluded from the employee’s income through the end of the taxable year in which the child turns 26.

Be sure to contact your independent insurance agent or health care provider for details.

Read more: Can I get health insurance without a job?

(photo: moe)