Skip to content
Trusted Answers From Licensed Business Professionals

Adult children under the age of 27, who don’t have their own health insurance, can stay on their parents plan even after college. But, is this the cheapest option for families?

small-business-health-tax-creditAre there any limits on who can qualify?
The law allows children to remain on their parents’ health insurance plan as long as they haven’t reached age 27 by the end of the year. It doesn’t matter whether they’re still in school, married or considered tax dependents by the IRS to get coverage.

Parents also will not need to take any additional steps after their child graduates as most insurers automatically continue coverage for dependents for the rest of the plan year. However, you may need to enroll again for dependent coverage during the following year’s health benefit election period.

Does the plan become more expensive?
Premiums for plans that include adult children will not rise by itself, but insurance companies can charge extra for dependents of any age. Some plans charge additional fees for each dependent that is added to the plan. If your adult child is healthy, then it may be worthwhile to compare pricing and coverage with independent health care plans for your child. Many states offer inexpensive plans ($100-$250) for healthy individuals in their twenties.

Are there any coverage restrictions?
Many plans will not extend coverage outside of the network to adult children living in another state. Read your policy in detail to determine if your adult child can still use in-network doctors that are outside of the local area.

What does this mean for the employee?
The new law assures that employer-provided reimbursements for the medical care of an employee’s adult child care are not included in the employee’s gross income.

If you have a cafeteria plan through your employer, with an option like a flexible spending account (FSA), you can now make pre-tax contributions to the account to help pay for the qualified medical expenses of your child. So money you put in your FSA can be used to pay for your son’s visit to the dentist or your daughter’s new glasses. And you don’t have to pay taxes on the money you contribute to the account.

You need to keep in mind that you must use the funds in the FSA by the end of the year, or you’ll lose them. And another provision in the new law prevents you from using FSA contributions for a wide range of over-the-counter medications, unless you have a doctor’s prescription.

More Questions? CFPs are online ready to answers your personal finance questions.

Related Articles
->It Better To Use Savings Bonds For Tuition or Student Loans?
->What Types of Travel and Entertainment Expenses Can You Writeoff?
->Can The Self Employed Deduct Commuting Expenses?
->Can I Find Reasonably Priced Dental Care If I Don’t Have Insurance?
->Tax Benefits for a Flexible Spending Account
->Risks with Health Care Credit Cards
->Are You Reviewing Your Medical Bills For Overages?

Share and Enjoy:
  • Digg
  • del.icio.us
  • Facebook
  • Google Bookmarks
  • LinkedIn
  • StumbleUpon
  • Technorati
  • Yahoo! Bookmarks
Leave a Comment