Can I Put My Parents On My Health Insurance?
The Affordable Care Act (ACA) only requires insurers to include a member’s current spouse and tax dependents on their health insurance policy. Therefore, while scenarios exist where you can extend health insurance coverage to your parents, many big-name health insurance companies will not allow it. In many cases, even parents with access to their children’s benefits will not receive the same ACA protections.
However, if you can claim your parent as a tax dependent, your health insurance company must agree to cover them under your family plan for an increased premium. Outside qualifying children, you can only name other relatives as tax dependents if they make under a specified annual income and you financially support them.
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What is a Dependent?
The IRS categorizes “dependents” as any child or direct relative you financially support and claim on your taxes. The most common dependents include:
- Biological children
- Stepchildren
- Adopted children
- Siblings or half-siblings under 19, in school, or permanently disabled
As national family dynamics have gradually shifted, some states like California have expanded dependent criteria to include needy parents and step-parents. However, most other states have yet to adjust.
Usually, policyholders can only add eligible dependents to their Marketplace coverage during the annual Open Enrollment Period (OEP) between November 1st and January 15th. However, if a dependent recently lost income or insurance coverage, they could enroll in your policy during a personalized Special Enrollment Period.
How Does Dependent Status For Parents Work?
A parent’s dependent status hinges on their financial eligibility and your insurer’s specific rules.
Dependent Eligibility
Dependent eligibility for health insurance varies based on your direct relation to the individual in question. For example, dependent children must meet the following criteria:
- Age: The ACA only requires companies to insure children under 26.
- Relationship: You can insure your biological children, stepchildren, adopted children, and foster children, as well as any of their children or siblings.
- Residency: They must have lived with you for at least six months.
- Income: You must provide for more than half of their financial needs.
If you are married, your insurer must also offer to extend benefits to your spouse. However, for coverage to apply, no one else can claim another policy member as a dependent on their tax return.
Which Providers Allow You to Add Your Parents?
All health insurance providers impose explicit criteria to determine a person’s dependent status. While most will only insure eligible children and spouses, the following programs have a history of including parents:
- TRICARE coverage for military families
- Employer health insurance plans
- Medicaid
- Medicare
- Dependent Care Flexible Savings Accounts
- A limited number of Marketplace providers, such as Kaiser Permanente and MetLife
Which Providers Do Not Allow You to Add Your Parents?
However, most private insurance policies purchased on and off the Health Insurance Marketplace do not allow members to extend benefits to their parents. The biggest names among these include:
- Cigna
- Aetna
- Anthem Blue Cross Blue Shield
- UnitedHealthcare
- Humana
How Much Does It Cost to Add a Parent?
The cost of adding a parent to your health insurance plan depends on your state, policy tier, and family size. In general, subsequent dependent premiums lower incrementally as your family grows. For example, the average monthly premium for an Oregon family costs $1,271 for a couple with one child, $1,470 for a 4-person family, and $1,718 for a married couple with two kids and a dependent parent.
You would also hold financial responsibility for your parent’s copayments, coinsurance, and deductibles due with covered medical services. If you have employer-sponsored coverage, your premium contributions will not count toward your taxable income, ultimately lowering annual tax liability.
Should You Add Your Parents to Your Health Insurance?
You can only add your parents to your health insurance policy if you can claim them as tax dependents or if your insurer will allow it. Adult relatives must have a significantly limited income, financially rely on you, and possess US citizenship to meet dependent eligibility criteria on your tax return. If your parent meets these requirements, enrolling them in your policy can prove a valuable strategy for ensuring their access to quality healthcare.
- Cost effective
- Easily manageable
- Lowers taxable income
- Not allowed by most insurers
- May not offer adequate coverage for chronic diseases
- Could be difficult to prove tax-dependent status
Advantages
Adding your parents to your health insurance presents many critical benefits, including:
- Allows you to conveniently manage coverage for your entire family all in one place.
- Guarantees some financial protection against surprise illnesses or accidents.
- Premium contributions for dependents on employer-sponsored plans will lower your taxable income.
- If your parent already relies on you for financial support, enrolling them in your plan will prove significantly cheaper than finding a standalone policy.
- Older people have a higher likelihood of experiencing chronic or regressive medical issues that can become very expensive without insurance.
- Elderly parents may no longer have the cognitive awareness or physical resources to independently research and enroll in a health plan.
Disadvantages
However, including your parents on your policy may not always pan out in your favor. Consider these potential downsides:
- Most seniors over 65 can enroll in Medicare, which often costs less than dependent coverage on a family plan.
- Very few private insurance companies allow members to extend benefits to non-tax-dependent parents.
- Low-income parents under 65 can access Medicaid or premium tax credits on the ACA Marketplace. Both could cost less than expanding your family coverage.
- Parents must meet more stringent requirements to receive tax-dependent status on their child’s return.
- Your parents may have advanced medical needs requiring you to purchase a more expensive benefits package.
- Every family member on your health insurance policy raises your monthly premium.
Alternatives to Adding Your Parents to Your Health Insurance
If your parents cannot receive healthcare benefits through your insurer, they might still find affordable coverage through Medicaid, Medicare, or the Health Insurance Marketplace.
Medicaid
Medicaid provides Americans with free or low-cost health insurance within 138% of the federal poverty level (FPL). If your parents have a limited income or qualifying disability, they should meet Medicaid eligibility. Not only does this state-moderated program offer premium-free essential healthcare benefits, but it rarely imposes typical cost-sharing measures like copayments, coinsurance, or deductibles.
Medicare
Medicare is a federal health insurance program that covers seniors above 65 and some younger people with eligible disabilities. Medicare Part A usually comes premium-free, and Part B costs $226 monthly. Members can also expand their benefits through Medicare Advantage or Part D prescription drug coverage. Failing to register for Medicare after age 65 often results in penalties, so enrolling immediately upon becoming eligible often proves a parent’s best financial option.
Marketplace Insurance
If your parents have yet to turn 65, they can shop for affordable policies on the Health Insurance Marketplace. If they fall within 100-400% of the FPL and purchase one of these plans, they can access an ACA premium tax credit capable of significantly reducing monthly premiums. However, the Marketplace does not extend these credits to Medicare-eligible seniors or parents with access to coverage through their employers.
Private Health Insurance
Employed parents may have access to group health benefits, in which employers typically pay over half of policy premium costs. Your parent’s contributions to the remaining sum would not count as taxable income, presenting numerous financial advantages.
Parents without group coverage can still try purchasing off-exchange private health insurance. While they would have to pay full price, it would at least ensure financial protection during routine health issues and emergencies.
All in All
Eventually, many people must begin taking care of their aging parents. While this can present many financial complications, claiming a parent as a tax dependent should make them eligible for benefits on your family health plan. Usually, this requires your parents to rely on you for most of their financial needs and have a significantly limited income.
While some states have expanded dependent criteria in keeping with modern family dynamics, many major insurance carriers still restrict parents from joining their children’s policies. If you cannot extend your health insurance benefits to your mom or dad, try exploring the viable alternatives available through government programs and the Health Insurance Marketplace.