A MM WWYD/hypothetical

smerka · May 2016

So you know the provision in Obamacare that allows kids to stay on their parents insurance until 26? If you were gainfully employed, would you stay on your parents insurance because it's 'free'? Does your answer change if you are married and/or have children of your own? This is totally hypothetical. I've just talked to people in this situation and they act as if it is stupid to not stay on your parents' insurance. I just find it surprising. I mean it makes sense from a financial point of view but I think it would feel like you're not quite a grown up.

labro · May 2016

From my personal experience - I stayed on as long as I could. My job situation after college was not great and it took me over a year to end up in a permanent full time job. It didn't change anything for my parents to have me on or off their insurance and they were totally cool with keeping me on so I stayed on. Plus it was damn good insurance. It didn't make me feel even less grown up. I guess my opinion would be different if I had been married or had children at that time but I didn't, and I really really appreciated that little bit of help from my parents during such a transitory time in my life.

julieanne912 · May 2016

I think it would depending on both the parents' and kid's situation. When I was 26, I made more money than my mom and stepdad did combined, so staying on their insurance, that they pay for, would be kind of lame.

But if I was a regular 26 year old, ie making sub 50k a year and struggling to get by, then I don't see an issue with it, as long as the parents don't mind.

Xstatic3333 · May 2016

I was in this situation, since MA had this option many years before the ACA. I did choose to leave as soon as I got a full time job, basically for pride reasons and the desire to be independent. I did have the option to, and my parents encouraged me to, but I bolted from both that and the family cellphone plan ASAP. I have zero judgement for anyone who does stay on as long as all parties are in agreement, however. My parents helped me in many, many ways as a young adult. They helped me get my first car, they helped a bit with my grad school tuition, they got me out of expensive jams before I had an e-fund, etc. Even though I chose to be independent in this particular area since my first job offered a decent plan, I was in no way instantly independent as soon as I graduated from college. Like @labro, I was definitely grateful for their help and hope to pay it forward by doing the same for my kids some day.

At a job like my H's, there would be no reason for an adult child to leave the plan since you have to pay the "family" rate with just two people. If we end up in that situation someday, I might just ask our adult child to put what they are saving by staying on our plan into a Roth IRA or something like that. I'm guessing that healthcare will be decoupled from work by then though.

Edit: spelling

hoffse · May 2016

Yes, I would do it if it made sense financially.

I think a lot of this depends on your relationship with your parents. My parents and I have had arrangements over the years that are designed to maximize the "family wealth" on an aggregate level when looking at both my parents' situation and my own situation combined. An example of this are high-interest student loans. I refinanced ~7% student loans with my parents at 4% fixed. That's a lower fixed rate than I could have gotten from a bank at the time, and it's a very safe investment at a higher rate of return than my parents could expect for their age (approaching retirement). Many would argue that borrowing money from your parents means you are not independent, but we set this up to be a win-win for both of us, and we treat it as a pure business arrangement.

So yes, I would stay on my parents health insurance - and they would encourage me to do it - if it was cheaper for them than it was for me.

cbee817 · May 2016

It's the Affordable Care Act... that's all I'll say about that part. From personal experience, after I graduated college and was starting grad school full time, I had to buy the college's health insurance plan because it was required for full time enrollment. I was 22, lived on my own, and was no longer covered on my mom's plan. I know if the ACA was available, she would have kept me on until I got a job with benefits (which was only about 9 months later). I had DD#1 when I was 28, but I think I would feel weird being on my mom's policy with a family of my own.. that seems a little lazy especially if you are on your own/have a job with benefits. However, my mom had me when she was 22 and lived with my grandparents until I was 6- she paid cash for doctor visits, but if the ACA was available, she could have remained on my grandpa's plan which would have helped for sure.

I think it depends on the circumstances- it's a good benefit to have for those that need it.

smetter04 · May 2016

I agree that this may depend on the relationship with your parents, but it also depends on other factors. For example, I stayed on my mom's insurance until I turned 26, even when I was married and gainfully employed with benefits available. I have a good relationship with my parents and it was a mutual decision that if it could save me some money, why not?

The 'other factor' in this was that my younger brother was still in college so he had to be on my mom's insurance, so they had to pay the family premium regardless of me. So it didn't cost my parents any extra to keep me on. Ironically, I turned 26 around the same time that my brother graduated college. I have no idea if he is still on their coverage.

short+sassy · May 2016

I'm in the "it depends" camp also. It depends on how good/bad the insurance was at my job. It depends on if there was an extra cost for my parents to have me on their insurance. Sometimes it is completely free for parents...like if there is a family plan in place anyway. Sometimes it is an additional expense...that could very well be a large additional expense.

If all parties agree, I don't see anything wrong with children staying on their parents insurance until they are 26. I personally have always found it odd the age is that high. But then, obviously no one consulted me on this aspect of the ACA, lol.

Mustard76 · May 2016

I'm obviously in the minority here, but I would certainly not stay on my parents' insurance because it was "free." To me it's more than a financial decision. And, FWIW, I have a great relationship with both of my parents. But I'm an adult, I have a job, I need to take care of myself. I didn't have a FT job for a month and a half after graduating college, and for part of that time, I went without insurance. While I understand that life is expensive, and insurance is a large part of that, that's just the life of an adult.

PurpleBookmark · May 2016

Personally I had my own insurance when I started working full time but I never thought to stay on my parents' insurance. It was part of my benefits so I never did a cost analysis I just thought it was how things were done.

Our family plan covers any number over 1 so financially it doesn't matter whether it was just DH and I or all 3 of the kids as well. I suppose I'd encourage them to put the money they save into student loan repayment, retirement or savings.

jtmh2012 · May 2016

I think depending on the situation adult children need to be on their own insurance. At each of the places I've worked, it has been employee, employee + 1 (used to be spouse), and employee + family. At that point I'm paying extra for my hypothetical adult child and at least with the places I've worked the employee rate is usually heavily subsidized compared to the other tiers. So being on their own plan would be cheaper than having to pay the family rate. Not to mention you have your own job, you need to pay your own way.

That said, I do see exceptions where there might be an employment gap or unstable employment. I've seen my brother have to go without coverage and it just sucks.

Erikan73 · May 2016

My one nephew did until he was 25. For my sister, it didn't make a difference on the cost of her insurance if he was on it or not because she was paying for a family plan which cost the same no matter how many people were on it. She has amazing insurance working for a local hospital. He had been working full time for a good company for a year or so. My sister & her husband an understanding that unless the child (they have 3) is still in school, once they turn 25 they have to get their own health insurance, own auto insurance and own cell phone plan.

als1982 · May 2016

I think this is an "it depends" situation. If the adult child is still in school or doesn't have a job that offers health insurance and the parents aren't paying any additional, then yes, I think it's okay. If it's an adult child with a job that offers insurance or is married, then no, I don't think that it's okay. IMO, if you're married, then you shouldn't continue to be reliant on your parents financially in any way.

crunchymommy15 · May 2016

I think this would totally depend on what kind of insurance parents have. I was 26 before this was law, so i didn't have the option (though it would have been nice after college to not be so concerned with finding a job with decent health insurance for a couple years.

my sister got a job that offered decent insurance, but chose to stay on my parent's plan because my mom had a HDHP where the premium was no different to have just my mom and dad on the plan versus my mom and dad plus dependents, the family deductible and max out of pocket is only 2x the individual, so between my mom and her regular blood work and prescriptions for RA, and my dad's hypertension meds they come close to meeting the max anyways. my brother and sister don't have to pay a premium, but cover their own health expenses until the family deductible and Max OOP are met. ultimately it's cost saving for my siblings because they don't have to pay premiums and cost saving for my parents because they meet their deductibles and max OOPs sooner.

LillibetteV · May 2016

I stayed on my mom's insurance until I was 26 (I'm 31 now) and it definitely helped me save money and get my life going. We talked it over and she said that, since she was already paying it anyways, she didn't care if I stayed a little longer because she'd rather I use the money I'd spend on my own premiums to start my 401(k). My first salary would not have allowed me to do both even while living at home. I started saving for retirement at 22 and I appreciate her so much for her help and advice. I paid my own co-pays and deductible, but she covered the premium. Last year I got a new job that is amazing except that there is a 1 year waiting period to join the 401(k) (2 more months! gah it drives me nuts!) and because I started so young this one year of reduced retirement savings isn't going to kill us in the long term.

hoffse · May 2016

I'll also add that costs vary widely depending on what sector you are in. My parents were in the public sector their entire careers. My mom is now retired, but she is insured through my dad who still works. He pays $109/month for a family plan with excellent coverage. They are in their 60's. I'm too old to be on their insurance now, but their cost stays the same regardless of how many people are on it.

I am in the private sector and currently pay more than that for single coverage on a high deductible plan, with significantly fewer benefits. My costs will quadruple when we have kids. There's just a huge difference between public and private, and if I could stay on my parents' insurance I would do it in a heartbeat. It wouldn't cost them a penny, and it would save us a lot of money.

So I really think it depends. I don't judge people for staying on their parents' insurance until 26. The law permits it. I think that you would have to know the financial situation of both the kids and the parents to make a mathematical judgment call about it, and that's nobody's business except for theirs.

Also, if the parents want to support their kids a little longer while they are getting established - even if it costs the parents more than it would cost the kids - I think that's fine. For many families, the parents are in a stage of life where they can readily absorb that extra expense, while it would be much harder for the kids. I think Lillibette's example is a really good one - she could afford either health insurance or retirement savings, but not both. Her mom helped her with the insurance while she was getting established so that she could prioritize her retirement (which is just as important). Again, that kind of arrangement is nobody's business but theirs, and the parents are adults who can always say no.

smerka · May 2016

I don't disagree but I think it is also an unintended consequence of the law. I was really surprised when I found out there were no exceptions. I totally get that kids go to grad school and may not be established in a job with health insurance for awhile. That's not the situation I'm wondering about. In the real life situation, the wife was on her parents' insurance. The husband carried insurance for himself and the kids. The husband then lost his job. I got all sorts of flack for suggesting the wife think about getting off her parents insurance and take care of her own family (once her husband got a new job)

crunchymommy15 · May 2016

How does being on her parents insurance prevent her from taking care of her family?

if her family has hit hard times, and being on her parents insurance is cost saving for them, isnt she taking care of her family by staying on her parent's insurance?

Xstatic3333 · May 2016

smerka said:

I don't disagree but I think it is also an unintended consequence of the law. I was really surprised when I found out there were no exceptions. I totally get that kids go to grad school and may not be established in a job with health insurance for awhile. That's not the situation I'm wondering about. In the real life situation, the wife was on her parents' insurance. The husband carried insurance for himself and the kids. The husband then lost his job. I got all sorts of flack for suggesting the wife think about getting off her parents insurance and take care of her own family (once her husband got a new job)

Stuck in the Box

Not knowing the full situation, or if there's more to the story, I think she might just have reacted poorly to the suggestion that she's not taking care of her family. I'm inclined to agree here that whether she's on her parents' insurance is really between her and her parents, and that if they are in certain fields it may not even be costing them any extra. It may not be comfortable for some, and that's fine, but I don't see anything morally wrong with doing it if all parties are fine with it.

Mustard76 · May 2016

While I agree that it's no one's business except the involved parties, I tend to equate the "free" concept to the fact that a mortgage payment doesn't increase with more people in the house, so why not just live with your parents forever? I know that's not the case being made here, but to me they're equivalent.

hoffse · May 2016

Mustard76 said:

While I agree that it's no one's business except the involved parties, I tend to equate the "free" concept to the fact that a mortgage payment doesn't increase with more people in the house, so why not just live with your parents forever? I know that's not the case being made here, but to me they're equivalent.

How on earth are those equivalent? They kick you off when you are 26, regardless of circumstance.

LillibetteV · May 2016

Mustard76 said:

While I agree that it's no one's business except the involved parties, I tend to equate the "free" concept to the fact that a mortgage payment doesn't increase with more people in the house, so why not just live with your parents forever? I know that's not the case being made here, but to me they're equivalent.

Typically people move out of their parents' home for privacy and space so I don't really see how that is equivalent. And even if they were plenty of people WANT multigenerational homes so as long as everyone wants it I don't see why so many people consider it "bad". My 65 year old father still speaks fondly of growing up in the same house with his grandparents - they wanted to be close.

I would compare it more to staying on the family cell phone plan without paying your share. We actually hold the family plan for my in-laws and they pay us their portion of the bill - it makes it cheaper for all of us since my husband gets a corporate discount. There is a line between independence and just spending more money unnecessarily and it falls in a different spot for everyone.

Mustard76 · May 2016

The argument that it's free is equivalent to me, so let me rephrase: it's equivalent to living with your parents until you're 26, because their payment will stay the same whether you're there or not.

crunchymommy15 · May 2016

Mustard76 said:

The argument that it's free is equivalent to me, so let me rephrase: it's equivalent to living with your parents until you're 26, because their payment will stay the same whether you're there or not.

This is a weak argument. For plans where the premium doesn't change it is often mutually beneficial for a child to stay on a parent's plan. like in my family's case. my mom and dad meet their family deductible most years on their own, but with my siblings (who pay their own medical expenses after any insurance discounts) they have more people helping them reach the family deductibles or max oop, so everyone pays less.

Xstatic3333 · May 2016

crunchymommy15 said:

Mustard76 said:

The argument that it's free is equivalent to me, so let me rephrase: it's equivalent to living with your parents until you're 26, because their payment will stay the same whether you're there or not.

This is a weak argument. For plans where the premium doesn't change it is often mutually beneficial for a child to stay on a parent's plan. like in my family's case. my mom and dad meet their family deductible most years on their own, but with my siblings (who pay their own medical expenses after any insurance discounts) they have more people helping them reach the family deductibles or max oop, so everyone pays less.

Plus, living at home adds wear and tear, space, privacy issues, etc. that sharing health insurance does not.

The prevailing values in our country place a really high premium on independence and standing on your own two feet. This is a good thing in many, many ways. But in many other cultures around the world, it is common and accepted for families to help each other out quite a bit more. More help is given to young people, more respect is given to elders, multi generational families are common, etc. There are pros and cons to both attitudes, but I don't think one is inherently better than the other.

ETA: Acknowledging that I just made some pretty major generalizations that won't apply in every situation.

hoffse · May 2016

I would compare it more to staying on the family cell phone plan without paying your share. We actually hold the family plan for my in-laws and they pay us their portion of the bill - it makes it cheaper for all of us since my husband gets a corporate discount. There is a line between independence and just spending more money unnecessarily and it falls in a different spot for everyone.

We do this too. I get a corporate discount, and H and I both get cell phone stipends that more than makes up for what we actually spend. My parents are on our plan because they can get Verizon services for almost nothing that way. They pay us like $50/month for their portion.

smerka · May 2016

I will just say this. When I become Queen, the law will be changed to say you can stay on your parents insurance until 26 unless you have a job that provides health insurance benefits and/or you are married and your spouse has a job with health insurance benefits. Gavel. If your parents want help you pay your premiums, that's your business.

smerka · May 2016

BTW - staying on your parents insurance will get you NO privacy. They will get every EOB, not you.

Mustard76 · May 2016

LillibetteV said:

Mustard76 said:

While I agree that it's no one's business except the involved parties, I tend to equate the "free" concept to the fact that a mortgage payment doesn't increase with more people in the house, so why not just live with your parents forever? I know that's not the case being made here, but to me they're equivalent.

Typically people move out of their parents' home for privacy and space so I don't really see how that is equivalent. And even if they were plenty of people WANT multigenerational homes so as long as everyone wants it I don't see why so many people consider it "bad". My 65 year old father still speaks fondly of growing up in the same house with his grandparents - they wanted to be close.

I would compare it more to staying on the family cell phone plan without paying your share. We actually hold the family plan for my in-laws and they pay us their portion of the bill - it makes it cheaper for all of us since my husband gets a corporate discount. There is a line between independence and just spending more money unnecessarily and it falls in a different spot for everyone.

I'm not saying any one way of doing anything is "bad," and in my original response, I believe I said IMO it's more than a financial decision. Financially, I could save a lot of money doing things differently, and having my parents' help. It's just not for me. I'm merely pointing out that a lot of things are less costly when you're leveraging your parents' help, and drawing a financial comparison based on a fixed cost. I don't think there's a right and wrong way of doing things.

AprilZ81 · May 2016

I think if you are on your parent's health plan (for whatever reason) that you (general you, not anyone specifically) should at least be paying your part of the premium and your own co-pays/co-insurance.

In my experience it is fairly unusual that there is no premium increase for additional people on the policy. Usually it is employee, employee + spouse, employee + child(ren), and family. I know my insurance goes up a lot if I add a spouse and not quite as much if I add a child. Our deductible and OOP Max goes up a ton.

If your family is lucky enough to have a policy where there is no premium increase for another person, then great. You should at least be paying for your own co-pay/co-insurance amounts though.

I think the family cell phone plan is a good example, if it is to everyone's benefit and everyone pays their part then great.

crunchymommy15 · May 2016

AprilZ81 said:

I think if you are on your parent's health plan (for whatever reason) that you (general you, not anyone specifically) should at least be paying your part of the premium and your own co-pays/co-insurance.

In my experience it is fairly unusual that there is no premium increase for additional people on the policy. Usually it is employee, employee + spouse, employee + child(ren), and family. I know my insurance goes up a lot if I add a spouse and not quite as much if I add a child. Our deductible and OOP Max goes up a ton.

If your family is lucky enough to have a policy where there is no premium increase for another person, then great. You should at least be paying for your own co-pay/co-insurance amounts though.

I think the family cell phone plan is a good example, if it is to everyone's benefit and everyone pays their part then great.

I think this is often true, but it is also often true that there is no premium change for adding a second, thrid, fourth,... tenth child to a plan, so for young adults with younger siblings it's very possible that staying on their parents' health insurance has no financial impact on their parents (given the young adult is covering, co-pays, co-insurance, or other costs).

I think it takes a lot of young people a few years to cut all financial ties with their parents. I was paying my dad for car insurance and my cell phone until I got married. It may be a bit of a laisse faire attitude, but I think most people get some kind of help from their parents somewhere along the way, and if their parents are ok with having them on their health insurance why waste the energy judging? there are so many reasons that that choice might make sense. the law doesn't say that parents have to keep their kids on their insurance until they're 26, it just allows for it to happen.

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