Young adult in cast looking disapprovingly at computer

Health Insurance: Kids Can Stay on a Parent's Plan Until 26, But Should They?

November 15, 2023

Stepping into adult independence is exhilarating, but it also comes with new responsibilities, like navigating the healthcare landscape. One of the first hurdles? Figuring out your health insurance.

Many young adults face the tempting lure of sticking with their parents' plan, a familiar haven of affordable coverage. But before cozying up to that option, it's worth exploring both sides of the coin to weigh the pros and cons and find the best fit for your unique needs.

Should a Child Stay on a Parent's Health Insurance Plan?

The Affordable Care Act (ACA) allows young adults to stay on their parents' health insurance plans until they turn 26. This presents a significant advantage, as it eliminates the need to search for and purchase a new plan, potentially saving money (for the child, at least), and providing ongoing access to familiar healthcare providers. However, there are also potential drawbacks to consider.

Pros of Staying on a Parent's Health Insurance

  • Convenience: Staying on a parent's plan is the simplest option, as it requires no additional effort or paperwork.
  • Cost Savings (for the child): The child won't have to pay any premiums or contributions, since parents cover the entire cost.
  • Familiarity: The child continues to have access to the same coverage and providers you're accustomed to.

Cons of Staying on a Parent's Health Insurance

  • Limited Freedom of Choice: The child may not be able to choose their own doctors or hospitals if the parents' plan has a narrow network; which could be a drawback especially if the child lives far away.
  • Potential Changes to Coverage: If a parent switches plans or drops coverage, the child loses out on coverage as well.
  • Lack of Control (for the child): The child won't have the same level of control over their healthcare decisions as they would if they had their own plan.

Understanding State Laws and Health Insurance

State laws play a significant role in determining health insurance options for young adults. It's essential to understand the specific regulations and age limits in your state to make informed decisions. Different states have varying rules regarding the age until which children can remain on their parents' health insurance plans. Some states align with the ACA's provision of coverage up to age 26, while others may have lower age limits.

Iowa, Nebraska & South Dakota

In Iowa, Nebraska and South Dakota; children can stay on their parents' health insurance plans until they turn 26, regardless of marital status, student status, or even if they live independently. This applies to both employer-sponsored and individual plans; and even the government marketplace. No additional fees or premiums are required for  offspring to be covered, even if they age out of college during the policy year.

Coverage and Healthcare Options

Assess your specific healthcare needs and determine if your parents' plan meets them adequately. If you have specialized healthcare requirements or frequent doctor visits, individual coverage with a broader network may be a better fit. 

If staying on your parents' plan isn't the best option for you, there are several alternative avenues for obtaining health coverage:

  • Employer-Sponsored Health Insurance: If you have a full-time job, explore the option of employer-sponsored health insurance. This can be a cost-effective and convenient way to secure coverage.
  • Individual Health Insurance Plans: Individual health insurance plans offer flexibility and choice, allowing you to tailor your coverage to your specific needs and budget. However, these plans can be more expensive than employer-sponsored options.
  • Health Savings Accounts: You can use HSA funds to pay for a variety of qualified medical expenses, including deductibles, copayments, coinsurance, and over-the-counter medications. This can help you to save money on your healthcare costs.

What to Do: Making an Informed Decision

To make the best decision for your health insurance coverage, follow these steps:

  • Research and compare health insurance plans: Utilize online resources and tools to gather information and compare different health insurance options. You can also visit our free Financial Learning Center to learn more about Choosing the Right Insurance.
  • Consult with a healthcare professional or insurance agent: Seek expert advice from a healthcare professional or insurance agent to help you navigate the complexities of health insurance decisions.

Remember, health insurance is a crucial investment in your well-being. Take the time to understand your options, carefully consider your needs, and make an informed decision that will safeguard your health and financial security.

Unsure about your health insurance or health savings plan?

Schedule an appointment with our experts to determine the best plan for you, and if a Health Savings Account suits your needs.

About the Author

Keri Struve, SHRM-SCP

Keri Struve is the Vice President of Human Resources and has been with Security National Bank since 2015. She holds the Society of Human Resource Management's Senior Certified Professional credential as well as the People Analytics Specialty Credential. A Sioux City native and graduate of East High, Struve attended the University of Iowa as a communications major.