27 Jun My son is turning 26 and we have to get health insurance. Help!

Q. My son is turning 26 and works as a freelancer so he has no employer health insurance. He’s healthy, takes two maintenance medications for depression/anxiety and we know he will have to get his own policy. How much should we expect him to pay? How do we know which plan to choose? What should we look for?
— Dad

A. The good news is that the Affordable Care Act will help your son get a more affordable policy without worrying about pre-existing conditions.

The bad news is that under that law, children can only be on their parents’ plans until age 26, as you well know.

But New Jersey has provided options for young adults who are currently covered under a group health plan, said Claudia Mott, a certified financial planner with Epona Financial Solutions in Basking Ridge.

If your son has that coverage now, you may want to confirm whether your employer is required to offer these options, she said. You can learn more here.

Mott said the other alternative would be to find a plan on the individual marketplace at GetCoveredNJ, the State’s official site for these plans.

If he lives in another state, he will need to use that state’s website.

Let’s review options under the law first.

COBRA — the Consolidated Omnibus Budget Reconciliation Act — allows for children of employees to elect to continue group health insurance for up to 36 months, Mott said.

“This generally applies to companies with over 20 employees as well as state and local governments,” she said. “Under this option, the child would be responsible for covering up to 102% of the full cost of insurance — both the employee and employer portions.”

That can be an expensive option.

Then there’s New Jersey’s Small Group Continuation.

“This provision applies to companies that have small employer health plans but are not required to provide COBRA benefits,” Mott said. “The cost to your son would be no more than 102% of the premium charged by the insurance company.”

Also pretty expensive.

Next, there’s the New Jersey Dependent Under 31 law, DU31.

“Under this law, young adults may continue on an adult’s group plan until the age of 31,” Mott said. “In order to be eligible, there are a number of requirements that must be met by the plan, the parent’s and the child. In particular, your son would need to be residing in New Jersey.”

If the alternatives above don’t meet your son’s needs and budget, using the Affordable Care Act site for his state of residence would be the next place to look.

“The lowest cost option would likely be a “catastrophic” health plan which is available to those under age 30,” Mott said. “The plans will cover the essentials like an annual physical and prescription drugs, but often come with high deductibles to offset the low premium. Unlike other plans on the Affordable Care Act, there is no credit available for lower-income applicants.”

The next step in the individual marketplace is a plan that is labeled either Bronze, Silver or Gold.

“The Bronze plans come with the lowest premiums but higher out-of-pocket costs like copays, coinsurance and deductibles,” Mott said. “Depending on your son’s level of income, he might qualify for a savings on his premium and that will be determined when he sets up an account on the website.”

Using the GetCovered NJ website will enable your son to compare and contrast the different plan options, coverages and costs and gather the information he needs to determine which option makes the most sense given his available income, Mott said.

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This story was originally published in June 2024.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.