Transcript of Affordable Care Act or Medicare Video Video
If you've benefited from a health insurance subsidy under the Affordable Care Act, also known as Obamacare, you may be feeling hesitant about Medicare. We get dozens of calls every year with questions about ACA plans and Medicare. Questions such as can an ACA plan that you purchase through the healthcare exchange work together with Medicare, or can people turning 65 keep their ACA plan instead of enrolling in Medicare? If you've been asking these questions about ACA Medicare, this video is for you.
Confusion over Medicare and the Affordable Care Act has been common among beneficiaries since the passage of the legislation. If you have an ACA plan through the marketplace, you can keep that plan until your Medicare starts. You will be able to terminate your ACA plan without any kind of late penalties once your Medicare benefits begin.
You should sign up for Medicare when you become first eligible, which is at age 65 for most people. Once your premium-free Part A Medicare benefits begin, you are no longer eligible for a premium tax credit, the subsidy, or any other savings that you may be getting from your ACA plan. If you keep your ACA plan, you would have to begin paying full price for it, which can be a huge rate increase if you've been getting a hefty subsidy that makes your ACA plan inexpensive. Even worse, if you fail to enroll in Medicare at age 65 because you choose to keep your Obamacare plan instead, you will later owe a Part B late penalty that will stay with you for as long as you remain enrolled in Medicare. It's a 10% penalty for every 12 months that you could have been enrolled in Medicare. So, if you waited two years, you would pay a 20% higher monthly premium for Part B for the rest of your life. This can be disappointing news if you've been getting your ACA plan very inexpensively due to a subsidy, however, it's better to know it now, so you can make the switch to Medicare like you are supposed to rather than pay penalties down the road.
Here are some of the most popular questions we have had over Obamacare and Medicare. These will help you learn more about changing from the marketplace over to your Medicare benefits.
- Once you enroll in Medicare, you should simply cancel your ACA plan. You do not need both coverages. Cancellation is not automatic, so you need to actively cancel your ACA coverage by calling the healthcare exchange and requesting the cancellation.
- As long as you are enrolled in at least Medicare Part A, you are considered to be covered by Medicare, which is excellent inpatient health insurance. You will owe no tax penalty in relation to Obamacare.
- You should not sign up for an ACA plan along with your original Medicare. In fact, it's illegal for anyone to sell you an ACA-qualified health plan if you are currently enrolled in Medicare. You cannot have ACA and Medicare at the same time, and you wouldn't want to because you'd be paying for double coverage anyway. So, if you are enrolled in either an ACA plan or a short-term medical plan, you'll likely want to cancel that coverage once you join Medicare. Many people use short-term health insurance plans to bridge the gap between when their employer coverage ends and when they turn 65 and become eligible for Medicare.
- Another question we often get is if you can choose an ACA plan instead of enrolling in Medicare You cannot do this if you are someone who like most people qualifies for free Part A because you or a spouse had the necessary work quarters to essentially prepay for your future Part A benefits.
- Your ACA coverage was never meant to replace Medicare. If you do not sign up for Medicare during your initial enrollment period, you'll be subject to substantial penalties when you later enroll in Medicare. Also, as I mentioned, once you're eligible for Medicare, you are no longer eligible for the subsidy premium tax credits that may be making your ACA plan so cheap in the first place.
If you miss your window to switch to Medicare, the federal government will catch up to you soon enough. When it finds out that you should have moved to Medicare at age 65, it will assess you a fine to make you pay back any subsidy dollars that you've received towards your ACA coverage since the time that you turned 65.
There is one exception regarding ACA and Medicare coverage. If you have not yet worked enough years to qualify for free Part A, you could choose an ACA-qualified health plan instead of Medicare. For example, we often see new immigrants enroll in ACA plans because they do not have enough credits to qualify for premium-free Part A, however, there are several complicating factors if you do this. First, whenever you later decide to return to Medicare, you may owe late enrollment penalties for Medicare Parts A and B. Second, if you are already taking social security benefits, and then you disenroll from Part A because you want an ACA plan instead, you could forfeit your social security benefits and have to pay back any benefits you've already received. Finally, the ACA plans are quite expensive compared to Medicare when you can no longer take advantage of the subsidy that has been reducing the price. In many cases, paying for Medicare Part A and enrolling in Part B as well can still provide you with more benefits at less cost than an ACA plan would cost.
It is somewhat difficult to estimate your cost for an ACA plan over age 65. Most of the insurance companies' ACA quote engines cut off at age 64 because they know you are supposed to leave your ACA plan for Medicare at 65. So, there is considerable hassle in going this route, even just to get quotes for a person 65 or older. It's best to work with a professional licensed agent to determine whether this option would be one you want to pursue and would really make any sense financially. You will want to avoid any gaps in health coverage, so just contact your ACA plan and request that it be canceled the day before your Medicare benefits begin. Don't be tempted to gamble with your health by canceling your ACA plan early. If you have more than a 63-day window between when your ACA plan ends and your Medicare begins, then when you enroll in a Medigap plan, they could impose a waiting period for preexisting conditions. Instead, you can just keep your ACA plan up until the day before your Medicare begins, and in the months leading up to your 65th birthday, you can work with a licensed insurance agent to take advantage of your six-month Medigap open enrollment window to enroll in any Medigap plan you want with no health questions asked. This way, your coverage is seamless with your Medicare Medigap and Part D coverage beginning the day after your ACA plan ends.
Coverage for Medicare and a Medicare supplement plan G would give you comprehensive benefits where you will pay nothing but the Part B deductible for Medicare-approved services and your monthly premiums. No copays or co-insurance on any covered Part A or B services.