Are There Penalties if I Put My Parents on My Health Insurance Plan?
SmartFinancial Offers Unbiased, Fact-based Information. Our fact-checked articles are intended to educate insurance shoppers so they can make the right buying decisions. Learn More
If you live in California, you can add your parents to your private health insurance plan with no penalty as long as they are financially dependent on you and don’t qualify for government-funded health coverage through Medicare. Some insurers in other parts of the country may also agree to extend coverage to your parents but there is no guarantee that they will do so outside of California.
Keep reading for more information about when you can put your parents on your health insurance and what other factors you should keep in mind as you look for the best coverage for your parents.
Can I Put My Parents on My Health Insurance Plan?
Under California’s Parent Healthcare Act, an insurance company is required to let you add dependent parents to your health insurance if you purchased a private individual or family plan through the state’s health insurance marketplace, Covered California. Many health insurance companies elsewhere in the United States won’t let you add your parents to your plan, although you can at least reach out to your insurer to ask whether you can do so if you’re not sure about the company’s guidelines.
Your parents are eligible to join your health insurance plan in California if they:
- Live in the plan’s service area
- Are not eligible for Medicare
- Meet the Internal Revenue Service (IRS) requirements for a qualifying relative
For a parent, stepparent or parent-in-law to qualify as your tax dependent according to the IRS, they must have an annual gross income under $2,000 and you must provide more than half of their annual financial support.
When Should I Add My Parents to My Health Insurance Plan?
You should only consider adding your parents to your health insurance if they are not eligible for coverage through a government-run program. For example, if your parents’ income is less than 138% of the federal poverty level, they could qualify for free or low-cost health insurance through Medi-Cal, which is California’s publicly-funded Medicaid program.
Can I Put My Elderly Parents on My Health Insurance?
Similarly, if your parents are over the age of 65, they should qualify for coverage through the federal government’s Medicare program and shouldn’t need to be on your insurance plan. Eligible members can get Medicare Part A for free if they or their spouse worked and paid Medicare taxes for at least 10 years, so your parents may only have to pay a premium for optional coverage like Medicare Part B.
That said, the Parent Healthcare Act provides unique coverage for “mixed-status” families, which include lawfully present immigrants and undocumented relatives they support financially. Undocumented immigrants aren’t eligible for Medicare and can’t buy private coverage through Covered California, so adding your elderly parents to your health insurance is likely your best option if they are undocumented.
Does It Cost More To Add My Parents to My Health Insurance?
Adding any dependent to your plan will generally cause your health insurance rates to go up, with parents having the potential to significantly raise your rates since older people may have to pay up to three times more for coverage than younger people. Nevertheless, it may still be more cost effective to add your parents to an existing plan rather than buying them separate coverage.
For example, the deductible and out-of-pocket maximum for a family plan are often double what they would be for an individual plan that provides the same coverage. As a result, if your family plan covers six people including your parents, you would collectively reach these thresholds and prompt your insurance company to contribute toward your medical expenses more quickly than if any of your family members had their own insurance plan.
What Types of Health Insurance Plans Can I Share With My Parents?
The Parent Healthcare Act only applies to private health plans that provide dependent coverage. Conversely, the law doesn’t apply to employer-sponsored group health insurance plans. It’s possible that you could be allowed to add your parents to an employer-sponsored plan in California or any type of private plan elsewhere in the country but your insurance carrier has no legal obligation to let you do so.
Can My Parents Be on Two Health Insurance Plans?
You can put your parents on two health insurance plans since there is no requirement for any two family members to be covered by the same plan. For example, if one of your parents is 60 and the other is 65, you may want to add the younger parent to your health insurance and let the older parent enroll in Medicare.
How Do I Add My Parents to My Health Insurance Plan?
If your health insurance company allows you to add dependent parents to your plan, you should simply be able to contact the insurer and provide documents showing that your parents qualify as dependents in order to add them to your plan.
You will usually need to add dependents to your plan during open enrollment, which lasts from November 1 to January 15 in the majority of states. However, you should also be able to update your coverage and add new plan members if your family experiences a qualifying life event. For example, you may be eligible for a special enrollment period if one of your parents dies or loses their job and employer-sponsored health coverage.