Dependent Coverage for Young Adults in Employer-Sponsored Health Plans
Most employers that offer health insurance include the option for enrollees to cover a spouse or other qualified dependents. Dependent coverage plays a key role in providing health insurance for individuals who either do not have access to their own employer-sponsored plan or find the plan they are offered unaffordable. This data note examines how dependent coverage changes with age, using data from the Current Population Survey (CPS) Annual Social and Economic Supplements for 2024.
Overall, just under half of individuals with job-based health coverage are enrolled as a dependent on a family member’s plan (47%). The likelihood of enrolling as a dependent decreases with age. Nearly all children (ages 0-17) with employer-sponsored coverage are enrolled as dependents, usually on a parent’s plan. Young adults, particularly those ages 18-25, are more likely to be covered as dependents than adults overall (72% vs. 32%). The Affordable Care Act (ACA) requires most employer plans allow young adults to remain on a parent’s plan until age 26. Before the ACA, employers typically limited dependent eligibility for young adults to an age less than 26 and often imposed additional eligibility requirements. This provision of the ACA, maintains considerable popularity, and has been credited with reducing the uninsured rate among young adults. In 2024, 56% or 19.3 million young adults aged 18-25 were covered on an employer-sponsored plan (Figure 1).
As young adults age, a greater share of those with employer coverage transitions from dependent coverage to being policyholders. For instance, while a majority of 18 and 19-year-olds with employer-sponsored coverage are still covered as dependents, the proportion decreases among those aged 24 and 25 (93% vs. 50%) (Figure 2).
The CPS asks about individuals’ health coverage and their relationships within the households. The survey does not capture details on how someone enrolled in a plan sponsored by someone outside the household is related to the policy holder. For example, it is not possible to ascertain who sponsors coverage for a young adult living away from home. In many cases, those covered as dependents on an employer plan sponsored by someone outside of the household may be a parent. In total, 17% of young adults with employer sponsored coverage are covered as dependents on a plan sponsored by someone outside the household and 55% are covered by someone in the household. Among young adults enrolled as dependents on a plan sponsored by someone within the household, 93% are covered by a parent, 4% are covered by a spouse and 3% by partner or other family member. These percentages change significantly once an individual reaches age 26, when the share of those covered on dependent employer coverage by a spouse increases substantially compared to those aged 25 (81% vs. 16%). In total, 1.2 million 25-year-olds are covered as dependents on employer plans, compared to 300,000 26-year-olds (Figure 3). The increasing share of 26-year-olds covered as policy holders may reflect a variety of factors, including a general trend of more young adults having job-based offers as they become established in the workforce, and more age 26-years-olds electing to enroll in their own employer plan when they are no longer eligible to enroll as a dependent on a parent’s plan.