Because of this, you may get a lot of questions as an employer from parents that want to keep their adult children on their health insurance policy. This is why you should consider covering this topic in your employee benefits education.
Under the Affordable Care Act (ACA), parents can keep their adult children on a health insurance policy that offers dependent care until they reach 26 years of age.
Even if parents are not claiming their young adults as dependents on their tax forms, they can still be covered by their parents' health insurance plan. The same could be said if the young adult is married and/or lives out of state.
Once young adults reach 26 years of age, they will need to get health insurance coverage of their own. For young adults under 30, the Health Insurance Marketplace offers some customized plans to best suit this demographic. If the young adult is still a student, his or her school may even offer basic insurance coverage for an affordable price.
A completely different issue that many parents contemplate is whether to keep their adult children on their health insurance policies even if they can get benefits of their own through an employer.
For example, a 22 year old college grad may have landed her dream job with an employer that offers an attractive employee benefits package. However, the catch is that the job is out-of-state. If she is currently covered on her parent’s plan, she should evaluate how their current plan would cover health care services received in that new location. Because the plan’s network may not extend into that state she could potentially end up paying more money out of her own pocket to receive care, should she stay on their plan as a dependent.
Another important fact to consider would be the cost per paycheck for her own employer’s plan vs the cost for dependent premiums on her parent’s plan. There can also be a tax advantage for parents to keep their young adults on their health insurance plan. Considering that the premiums from employer health plans are withheld from salaries, parents could continue to realize a tax benefit if they are paying more money to insure their adult children, especially if they have already exceeded the annual Social Security tax cap of $113,700.
Ultimately, some number crunching needs to take place to make the best decision. But in many instances, for a two-parent household that is already spending the money for a family health insurance policy, it’s more economical to keep the young adult on their insurance plan until he or she reaches 26 years of age.
So that you can be well-versed when you speak to employees about these important questions, please contact us at Summerlin-Roberts to learn more about the rules of keeping young adults on a family benefits plan.