Even if you're not a dependent, you generally can stay on your parent's health insurance until you're 26. After that, you'll receive a special enrollment period to find new coverage. As an independent filer, you'll be responsible for reporting health care information on your own tax return.
Coverage for Children
You don't have to be considered a dependent for tax purposes to stay on your parent's health insurance. The Affordable Care Act allows children to stay or re-enroll on a parent's plan until they are 26 years old. As long as you're under 26, you can be on a parent's health insurance plan even if you live by yourself, are attending college, are married or financially independent. Even individuals under 26 who are eligible for health insurance through an employer can still opt to stick with their parent's coverage.
Limitations on Coverage
Although federal law allows you to remain on your parent's health insurance until you're 26, it's not always feasible to do. Health insurance carriers are not required to cover dependents. Your parent's health insurance plan isn't obligated to cover you if they don't cover dependents, regardless of your age. Also, many employers only subsidize the cost of the primary individual on the health insurance plan. Because of this, the rate you pay on a parent's plan may be more than what you'd pay through your work or a Marketplace plan.
If you're not a dependent but you're on your parent's health insurance, you'll have to file a separate tax return. You'll see a question on your Form 1040 asking if you had qualifying health coverage during the year. As long as you were covered by a plan that has minimal essential coverage, you may mark 'yes.' If you had a consecutive gap of more than three months in coverage, you'll have to pay a penalty. Depending on how much you earn, you could owe hundreds of dollars for failing to obtain coverage.
After you turn 26, you must find your own health insurance carrier. When you turn 26, you'll qualify for a special enrollment period of 60 days that allows you to enroll in a Marketplace healthcare plan outside of the open enrollment period. If you don't enroll in a plan during this period, you may not be able to enroll in a health insurance plan until the next open enrollment period. If this ends up being a gap of more than three months, you'll have to pay the tax penalty.
- HealthCare.gov: Health Coverage for Children Under 26
- CMS.gov: Exemption Information if You Had a Gap in Health Coverage
- Kaiser: What are the Penalties For Not Getting Coverage?
- Kaiser Family Foundation. "Medicaid and CHIP Eligibility, Enrollment, and Cost Sharing Policies as of January 2020: Findings From a 50-State Survey." Accessed Sept. 13, 2020.
- InsureKidsNow.gov. "Frequently Asked Questions." Accessed Sept. 13, 2020.
- U.S. Centers for Medicare & Medicaid Services. "The Children's Health Insurance Program (CHIP)." Accessed Sept. 13, 2020.
- U.S. Centers for Medicare & Medicaid Services. "If You’d Like to Change to a Marketplace Plan." Accessed Sept. 13, 2020.
- U.S. Centers for Medicare and Medicaid Services. "Premium Tax Credit." Accessed Sept. 13, 2020.
- U.S. Centers for Medicare and Medicaid Services. "How to Get or Stay on a Parent’s Plan." Accessed Sept. 13, 2020.
Based in San Diego, Calif., Madison Garcia is a writer specializing in business topics. Garcia received her Master of Science in accountancy from San Diego State University.