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A Long Overdue Change to Help Young Adults Get Coverage

Secretary Kathleen Sebelius explains the new regulations that will, in conjunction with the Affordable Care Act, allow young adults to stay on their parents’ health insurance plans until age 26.

As families around the country celebrate high school and college graduations this month, they can also cheer another piece of good news: as part of the Affordable Care Act, our Administration is issuing regulations today that will allow young adults to stay on their parents’ health insurance plans until age 26.

This change is long overdue.  For years, getting a diploma also meant losing your health insurance.  And whether you went on to college or not, it was often hard as a young person to find affordable coverage.  Overall, Americans in their twenties were twice as likely to go without health insurance as older Americans.

I saw this firsthand as a mom.  When my sons graduated from college, they both found jobs.  But like a growing number of employers, neither of theirs offered health insurance.  Fortunately, they were both healthy and could afford to buy coverage.  But I often wondered: what if one of them had a preexisting condition like diabetes?  What if our family had fewer resources?

For too many young Americans over the years, the answer to these questions was simply to go without health insurance and hope that you stayed healthy.

Thanks to the rule we’re establishing today, no young American will have to take that risk ever again.  Under this policy, insurers will be required to allow any American under the age of 26 who doesn’t get health insurance through their job to stay on their parents’ plan.  To get more details, you can read this fact sheet or Q&A.

This provision was scheduled to go into effect in September.  But we didn’t want any young person to needlessly go without health insurance this summer.  So over the last few weeks, we’ve reached out to insurance companies and asked them to make this change immediately.  And to their credit, we’ve gotten a terrific response.

So far, every major insurance company – more than 65 in total – and several major self-insured organizations have said they will provide continuous coverage for young adults this summer.  That’s great news for graduating seniors and their families who will get added security in exchange for premiums that are only expected to rise by .7%. 

And it’s not a bad deal for insurance companies or employers either.  Insurers will save the administrative costs that would have added up as they dropped people in May only to sign them back up in September.  And businesses have already been notified that the tax exclusion for employer health benefits will apply to all the young adults who choose to stay on their parents’ plans.

It’s only been seven weeks since President Obama signed the Affordable Care Act, but Americans are already seeing the benefits.  In addition to this new security for young adults, small business owners have been notified about a new tax credit to help them provide health coverage for their employees.

Seniors who have hit the prescription drug donut hole will begin getting $250 rebate checks next month to help them afford their medications.  And we’ve been working closely with states for weeks to develop a new insurance option for uninsured Americans with preexisting conditions.

After years of feeling like they were losing control over their health care, Americans are finally getting a glimpse of a better future.  And in the months to come, we’re going to continue to work diligently with our partners across the country to deliver the promise of this new law and make our health care system work better for the American people.

Kathleen Sebelius is Secretary of the Department of Health and Human Services