The Twenty Something’s Guide to the Affordable Care Act

The Affordable Care Act required most Americans, even millenials, to have minimum essential health insurance coverage by March 31, 2014 or face a tax penalty on 2014 taxes filed in 2015.

If you’re a twenty-something who is a college student, grad school student, or someone about to start your first job, you might be wondering how your age and the Affordable Care Act affects your health care situation and taxes.

As a twenty-something under Obamacare, you have the opportunity to remain on your parents’ insurance plan until you reach the age of 26 and avoid facing a tax penalty, even if you are married or do not currently live with your family.

That also applies even if you are financially independent from your parents or are eligible for your employer’s health insurance plan – as long as you are under the age of 26 you’re allowed to stay on your family’s plan.

For twenty-somethings over the age of 26 (or if you choose to purchase your own health insurance and leave your parents’ plan), here are a few available options for individuals between the ages of 18 and 29:

• Student Health Insurance Plans: Almost all colleges and universities throughout the U.S. provide options for student health insurance plans that are available during your time as a student. Coverage under these plans usually ends when your time as a student ends, whether that’s at graduation or if you leave the university at any time.
• Health Insurance Plans Through Your Employer: If you just started your first job and are a full-time employee, your employer should offer group health insurance coverage. Typically you’re free to enroll in employer-sponsored plans shortly after your hire date. Under the Affordable Care Act, you cannot have a lapse in coverage longer than three months so make sure to check in with HR about your options and timing for your coverage to kick in. Consider staying on your parents’ plan for a few months, if your lapse in coverage will be longer than three months or consider a short-term healthcare plan.
• Marketplace Plans: If you lose coverage because you’ve turned 26, your full-time job becomes part-time, or if you are a recent grad you may be eligible for a 60-day special enrollment period for plans offered through the online Health Insurance Marketplace. These plans are also a good option for individuals who are over 26 and leaving their current job to go back to graduate school and in need of health insurance coverage. If you don’t qualify for the special enrollment period through the Health Insurance Marketplace, you can sign up for health insurance during open enrollment which begins on November 15, 2014.
• Short-term Coverage Plans: As the name implies, these types of plans cover you for a short period of time. Typically, they are not renewable after the set expiration date. While short-term plans are not considered minimum essential health coverage, they can provide medical coverage for any potential health care services you might need in between a coverage period, for example if coverage from your parents’ plan ends on July 15^th and your employer plan doesn’t begin until October 15^th.

As with all tax laws, TurboTax is up to date and has you covered.  If you have more questions, TurboTax Health can help you understand how the Affordable Care Act impacts you and your finances.