Home » Blog » Congress Confused About Coverage Opportunities for Young Adults, As Are Many

Congress Confused About Coverage Opportunities for Young Adults, As Are Many

In today’s Congressional hearing on the ACA and the rollout of the federal exchange website there was an inaccuracy that went unaddressed. Representative Paul Ryan expressed concern regarding young adults who can be covered through their parents until age 26, but choose to enroll in Exchange coverage instead. Ryan asked the Centers for Medicare and Medicaid Services administrator Marilyn Tavenner if the federal website verified if young adults have access through their parents’ employment-based coverage, and stated that if they did, they would be ineligible for premium subsidies. This assertion is partially accurate and partially inaccurate.

Eligibility for premium subsidies is based on tax filing status. In the case of coverage for young adults, an important factor is claims of dependency. If parents claim young adults as dependents on their federal tax return, then the parents’ income is considered when determining eligibility for premium assistance for their young adult children. Otherwise it is not considered. Young adults who file their own tax returns and are not claimed as dependents have full access to premium assistance in the Exchanges based solely on their own income. Their parents’ income and the potential offers of coverage through the parents’ employers are irrelevant.

Potential offers of coverage through parents’ employers are relevant for young adults claimed as dependents. Adult children claimed as dependents potentially have three options: receive coverage under their parents’ employment-base plan (if one exists and the parents are willing), purchase an Exchange plan with their parents (with premium assistance based on household income), or qualify for Medi-Cal based on their income alone.

In order to claim an adult child living at home as a dependent, the adult child must have income of less than $3,900 annually. Adult children can also be claimed as dependents by their parents under federal tax laws if they are full-time students up to age 24, regardless of income. Eligibility for premium assistance for adult dependents is assessed based on the household income, including the parents’ income, and the potential offer of dependent coverage could disqualify them from premium assistance through the Exchanges. This disqualification would happen on the front end, not at tax filing time.

Young adults claimed as dependents may be eligible for Medi-Cal based on their income alone. Medi-Cal eligibility rules permit coverage of children up to age 21, counting the income of the whole family. Children can be emancipated and live and apply on their own beginning at age 18, in which case only the emancipated child’s income counts. When determining Medi-Cal eligibility for those 21 or over, the only income counted is that of the applicant and his or her spouse. Those young adults living with their parents can qualify for Medi-Cal based solely on their income.

Hope you got all that.

Tags: , , , , , ,