Some form of health insurance is a basic part of personal and family well being and most employers will make it an offered benefit, one choice being to cover a spouse or dependents under the employers health plan. For those who don’t have their own access to an employer sponsored health plan or can’t find the choices they are offered cost effective, dependent coverage is critically important. In this article we examine the impact of health insurance dependent age on coverage using data from the 2024 Current Population Survey (CPS) Annual Social and Economic Supplements. Additionally, it looks at how dependent coverage is changing as people go from childhood to adulthood — specifically how age impacts eligibility and its attainment of health insurance.
Remedies for Dependent Coverage in Employer Sponsored Health Insurance
Many employer sponsored health insurance plans allow the enrollee to add their spouses and dependents to their coverage. Health insurance for individuals, especially children, and young adults that gain depends on who pays the premiums. It allows millions of people across the United States to maintain access to health insurance.
Ninety-seven percent of individuals enrolled in job-based coverage and 47 percent of those enrolled as dependents have coverage under a dependent status. Most of these children and young adults are drawn from a group who can enroll in a parent’s or other family member’s health plan. But the data gathered from the CPS show that the extent of dependent coverage changes drastically with age.
Dependent Coverage for Children: Ages 0-17
Nearly all children ages 0 to 17 with employer sponsored health coverage are enrolled as dependents on their parent’s health plan. Often dependent coverage is necessary when a child’s health needs, and to be on other occasions reliant on not working means they need to be covered by the parents’ coverage to access healthcare service. The largest pool of the people under the family plans is these younger dependents.
Young Adults and Health Insurance: The Transition Period
For young adults, between the ages of 18 and 25, the picture of coverage gets less clear cut. The Affordable Care Act (ACA) requires most employer health insurance plans to give young adults to remain on a parent’s plan until they are 26. This provision was introduced before that because young adults usually struggled to acquire affordable health insurance when they became adults rather than with their parents.
By 2024, nearly 56 percent of members were enrolled in employer plans for young adults ages 18 to 25. It is a big increase, largely attributable to the ACA’s rule that allows young adults to remain on their parent’s health insurance plan until age 26. As a coverage extension designed to lower the uninsured rate for young adults who are likely in school, at the beginning of their careers, or otherwise unable to maintain individual coverage, both sides agree this has been a success.
Nevertheless, between ages 18 – 19 and 24 – 25 years, there is a clear difference. In fact, only 93 of 100 18 and 19 year olds with employer coverage keep being enrolled as dependents, but the proportion drops rapidly when these people grow up and reach 24 or 25, since about 50 still have coverage under a family member’s plan.
The Policyholder Age: 26
Under the ACA provision, once young adults become 26 they no longer are eligible to stay on their parent’s health insurance plan. It is a major milestone in terms of health insurance status. Even the data presents a drop in the number of a covered dependents at this age.
For instance, in 2024, we had 1.2 million 25 year olds covered under dependents under an employer plan but only about 300,000 26 year olds. That is a huge shift in being able to rely on being a policy holder in place of being covered dependent. Once young adults have found their own job-based health plan, they start enrolling in the plans when they turn 26 and age out of their parents’ coverage.
Coverage Sponsors: Who Pays for the Coverage?
The CPS data also helps to understand who actually pays for young adults’ coverage. About 55 percent of those 18 to 25 with employer-sponsored coverage are covered by someone in their household, often a parent (93%). But 17 percent of young adults are insured through someone not in the household. For instance, in such cases the sponsor of coverage may be a parent who is not a part of the household.
The trend is reversed once people turn 26. The number growing faster than any other age group is coverage under dependent employer plans financed by a spouse at 26. Compared with those who are 25 years old and have employer sponsored coverage, only 16 percent of 25 year old’s have spousal coverage but by the time they are 26 years old that figure rises to 81 percent. This shift could mean that many young adults will be picked up on a spouse’s plan or become policyholders themselves as they enter the workforce and find careers.
Shift from Dependent to Policyholders
Several factors contribute to this shift from dependent coverage to becoming a policyholder, including:
Employment Stability: Initially, young adults remain excluded from the regular health insurance plans because they are not yet that established in the workforce and do not have employer sponsored insurance. It can also mean you have a more stable and consistent source of coverage than will be there if you are relying on the coverage of a family member’s plan.
Income and Affordability: And for many young adults, their income, and the affordability of employer sponsored plans may also serve to influence the transition to policyholder status. On their own, once they earn their own income, they may prefer to find a way to enroll in their own plan and this could get cheaper as they age up and out of the dependent make to enroll in a plan.
Marriage and Family: Most people marry, have children, and get added to their spouse’s health insurance plan once they reach their mid 20’s.
Conclusion
The health insurance dependent age is a measuring stick of employer sponsored health coverage in the U.S. Dependent coverage has helped to bring millions of individuals—mostly children, young adults—access to healthcare. The Affordable Care Act will make it difficult for most young adults to go without health insurance for long periods — or long enough to fully develop the skills needed to navigate on one’s own.
A key milestone in transitioning from dependent coverage to policyholder status is such an important time in the lives of young adults as they age and move up in career. This helps them understand these trends and changes in eligibility for coverage and be assured that they know what their options are as they age out of coverage under their employer and into their own health plan.
Through a thoughtful examination of the health insurance dependent age individuals can choose what they will and won’t have health coverage for and plan for a secure and healthy future.
