Financially helping adult children does not hinder their independence

Traditional advice for parents is to break financial ties with their young adult children as soon as possible.

We have been told to push them to protect themselves financially or to risk irresponsible adults – living idly in their childhood bedroom or basement – ​​unable to manage their money.

But this advice is old that in the midst of reality economy still struggling from the consequences of the pandemic. Helping adult children does not hinder their independence.

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Our children now face monthly rent payments that can exceed 50 per cent of their take-home pay. inflation Causing a jump in food prices. energy expenditure are above. If your child needs to buy a new or used car, they have to face exorbitant prices,

I have long advocated that parents encourage young adults to stay at home for as long as possible, especially if they are required to pay. Massive student loan debt. Even if they don’t have debt, having a few years rent-free can help them immensely when they eventually launch. So all three of my 20-something kids, after figuring out the cost of rent in the DC area, are happily living at home.

already normal and acceptable For young adults to stay on the family cellphone plan. HereThere’s another way to help your young adult children that can have a lasting impact: Put them on your health insurance plan. If you can continue to take your child on your policy after getting their first full-time job, it will give them many years of savings that can be used to pay off debt or boost retirement contributions.

with the passage of Affordable Care Actalso known as ObamacareYoung adults can remain on a parent’s plan until age 26. But you may not realize that they can stay on the plan even if they work for a company that provides health coverage.

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The ACA requires plans that offer dependent child coverage to be available until age 26. Coverage is mandatory, regardless of whether they are married or have children. In general, they can stay on the plan even if they are not living at home. They also don’t have to claim to be a tax dependent to have coverage.

Sit down with your child and review the cost of getting their own coverage through your employer, as the financial matter is forcing them to continue until 26 if you can afford it.

Even when employees have coverage, the combined cost of premiums, deductibles, and other out-of-pocket expenses can be substantial.

Annual premiums for employer-sponsored family health insurance were $22,221 for families and $7,739 for singles coverage last year, according to 2021 Employer Health Benefits Survey by Kaiser Family Foundation.

Most covered employees contribute to the cost of their coverage. On average, workers contribute 17 percent of the premium for single coverage and 28 percent for family coverage. The average annual amount contributed by covered workers was $1,299 for single coverage and $5,969 for family coverage.

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The financial burden of deductibles continues to grow. The KFF report said last year, 85 percent of covered workers had a plan deductible, up from 74 percent a decade ago.

The smaller the company, the larger the deductible. KFF said that on average, firms with fewer than 200 employees have 70 percent more employees than firms with at least 200 employees ($2,379 versus $1,397).

“While many employers pay a significant portion of health insurance premiums, some workers face relatively” Higher contribution to enrollment in coverageaccording to a separate health system tracker report good By Peterson Center on Healthcare and KFF. “People with employer coverage often face deductibles that may require the nominee to spend thousands of dollars Most of the services have been covered before the plan.”

The report found that workers in low-income households with employer coverage spend more of their income on health costs.

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The key word in my argument is potency. Staying on a parent’s plan may not be cheap. For us, the cost would not have changed, because as a couple, we still needed a family plan.

This may not be possible if you are hoping to get rid of dependent care coverage because you need to save money. It may also happen that your child has moved to an area where it makes no sense for them to stay on your plan if they have to see medical professionals outside of your coverage network.

If you’re struggling, your child can share the expenses while helping with the deductible or co-pay. It doesn’t have to be an all-or-nothing agreement.

Soon, they will grow old and be on their own. But having the lag between you afford them and paying all of their health care costs can make the difference between depositing a significant amount into an emergency fund and retirement account.

At the beginning of an adult child’s full-time employment, allowing them to stay on your health plan gives them room to catch their financial breath.

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