Health Reform Gives Young Adults Coverage Choices

August 6, 2013 at 12:48 pm

Health reform has already benefitted adults under age 26 by allowing them to obtain health insurance coverage under their parents’ policies — a feature of the law that is providing coverage to more than 3 million young adults.  Millions more will gain access to coverage in 2014, when new, federally financed premium subsidies will help reduce what low- and moderate-income people will have to pay for coverage.

But Rep. Paul Ryan (R-WI) gave a false impression of how those coverage options will work at a House Ways and Means Committee hearing last week.  He incorrectly claimed that under health reform, young adults under age 26 who earn between 100 and 400 percent of the federal poverty line will be ineligible for federal tax credits to help pay their premiums for plans offered through the new health insurance marketplaces (also known as exchanges) if they can get coverage under their parents’ plan.

That’s simply not true.  Most young adults will have multiple coverage options.  They can obtain coverage through their parents’ plan if available, or through their own employer if their job offers health coverage.  Young adults may also qualify for Medicaid depending on their income and on whether their state has chosen to adopt health reform’s Medicaid expansion to cover low-income adults.

For young adults who are not eligible for Medicaid, premium tax credits would be an option as well, as long as they have incomes in the subsidy-eligibility range (100 percent to 400 percent of the poverty line), their parents don’t claim them as a dependent on their tax return, and they don’t have an offer of affordable and adequate coverage from their own employer.  The fact that they also can enroll under their parents’ policy does not in and of itself preclude them from obtaining exchange coverage using the premium credits.

Young adults will have to choose their coverage options carefully, considering each available option’s costs, benefits, and provider networks, for example.  But the result will be a welcome one:  more young people will have greater access to much-needed health insurance coverage.

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More About Judy Solomon

Judy Solomon

Solomon is Vice President for Health Policy at the Center on Budget and Policy Priorities, where she focuses on Medicaid and the Children’s Health Insurance Program and issues related to the implementation of health reform, particularly policies to make coverage available and affordable for low-income people.

Full bio | Blog Archive | Research archive at CBPP.org

8 Comments Add Yours ↓

Comments are listed in reverse chronological order.

  1. Ed #
    1

    Thanks Judy for the great information. Yes, I am also a health insurance broker (for 34 years). This time of the year is when the student health insurance plan decisions crop up the most. A common dilemma is when a child is going to school out of state, and their parent’s plan does not extend network coverage to the child’s area.

  2. DeeDee #
    2

    same question as Brian — is a young adult under 26 eligible for premium subsidies if they could be on a parent plan?

    • Judy Solomon #
      3

      Hi DeeDee,

      See my answer to Matt’s question. That should clarify.

  3. Matt #
    4

    Judy,

    I am also an insurance agent working in the Marketplace. I would like to echo Brian’s comment from October 25th…is there anyway that you could email me information regarding Brian’s question as well?

    I have not been able to find information stating that being eligible for coverage under a parent is insignificant in regard to determining one’s own subsidy eligibility. Thank you.

    • Judy Solomon #
      5

      Thanks for your question. A provision of the IRS/Treasury regulations on eligibility for premium tax credits makes it clear that under 26 year olds who could obtain coverage through a parent’s coverage but are not claimed as a dependent by their parents can qualify for premium tax credits:

      The provision is 1-36B-2(c)(4) –It reads:

      (4) Related individual not claimed as a personal exemption deduction. An individual who may enroll in minimum essential coverage because of a relationship to another person eligible for the coverage, but for whom the other eligible person does not claim a personal exemption deduction under section 151, is treated as eligible for minimum essential coverage under the coverage only for months that the related individual is enrolled in the coverage.

      (Here is the entire regulation: http://www.ecfr.gov/cgi-bin/text-idx?SID=a3496cfb8d117e7d299fcb6ee518a8bb&node=26:1.0.1.1.1.0.5.53&rgn=div8)

      In other words, if not claimed as a dependent by the person with the employer coverage, then only a barrier to coverage if the individual actually enrolls in the employer coverage.

      • Matt #
        6

        Thank you so much!

  4. Brian Liechty #
    7

    Judy: I am an insurance agent working in the Marketplace. I am somewhat an ACA geek and follow the details that affect my clients closely. In the last sentence of the next-to-last-paragraph of this post you say that the mere availability of parent’s insurance does not in itself make an under-26-yo ineligible for tax credits. I want to believe this is true, as several clients could then take advantage, but I cannot find this anywhere reading the law itself. What I’ve found says that someone eligible for other insurance is automatically ineligible for their own tax credit. Can you provide the citation for this question/answer please?
    Thanks,
    Brian

    • Judy Solomon #
      8

      Thanks for this question, Brian. I’ll be in touch via email.



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