Retirement is just around the corner. As you may know, you’ll automatically be eligible for Medicare Part A once you turn 65. However, you may still be on your Marketplace plan. How do you transition?
It’s important to note that once you can enroll in Medicare, you’re no longer eligible to receive tax subsidies for your monthly premiums. Unfortunately, your Marketplace plan won’t terminate automatically. You must keep track of key dates to ensure you have the best coverage for your needs.
Read on to learn how to move from Obamacare to Medicare, and enroll in the proper coverage.
What does Obamacare cover at age 65?
The Affordable Care Act ensured that senior Americans have healthcare coverage even if they have pre-existing conditions. This is a great stopgap if you’ve already stopped working before age 65. The ACA also allowed individuals over age 65 to get health insurance. Previously, insurers could decline to cover someone over that age.
Thanks to ACA, you can keep your coverage once you turn 65. This means you can elect to retain your Marketplace plan. However, some plans can be quite expensive without subsidies. As soon as you’re eligible for premium-free Medicare Part A, you’ll lose those subsidies.
If you’re receiving Social Security or Railroad Retirement benefits, you’ll be automatically enrolled in Medicare A the month you turn 65. Premiums are automatically covered by your taxes (assuming you worked at least 40 quarters). Thus, your subsidies will end once you turn 65.
Otherwise, you should enroll in Medicare 3 months before or after your 65th birthday. Once you’re eligible for premium-free Medicare Part A, it’s time to terminate your Obamacare plan.
How do you transition to Medicare?
You’ll either be automatically enrolled in Medicare (if you’re receiving Social Security payments) or sign up manually. Unfortunately, your insurer cannot transfer your enrollment to Medicare Advantage. This is only possible if you’ve already enrolled in a Medicaid management plan and will be eligible for a special needs plan.
Don’t delay in signing up for Medicare once you become eligible. The late enrollment penalty sticks to your payments, so you’ll continue paying higher Medicare Part B premiums. And if you lose your Obamacare subsidy, you’ll be on the hook for higher premiums (or tax penalties) for your ACA plan.
To keep your costs low, enroll in Medicare as soon as you become eligible. This is typically three months before your birth month. For example, if your birthday is in June, you can enroll as soon as March of that year. You’ll maintain Obamacare
Once you’ve enrolled, schedule your ACA coverage to end. If you enroll in Medicare within the three months before your birthday, coverage starts the first day of your birth month. You’ll still receive subsidies for all coverage months prior to this date.
If you wait to enroll until after your 65th birthday, things get complicated. You will maintain a subsidy for your birth month, but your Medicare Part A will only apply retroactively. However, Part B can be delayed up to 6 months. This means you could be without both your premium subsidy and the coverage you need.
Can you keep your ACA plan instead of Medicare?
If you’re ineligible for premium-free Medicate Part A (e.g. you haven’t worked 40 qualifying quarters), you can keep your Obamacare plan. You’re only prohibited from renewing or purchasing Marketplace coverage if you’re eligible for premium-free coverage.
In that situation, you retain your tax subsidy. So, if you can’t enroll in premium-free Medicare Part A and prefer your ACA plan, you can still get help paying your premiums.
However, you may still incur the Medicare enrollment penalty, which can add 10% to your premiums. Weigh the cost of maintaining your ACA plan against the late enrollment fees.
In sum, if you’d like to delay Medicare enrollment, keeping Obamacare coverage will only work if you’re required to pay premiums for Medicare Part A. However, it’s rarely a good idea to have both. Medicare trumps other coverage, so your ACA insurer would likely refuse to pay out. Thus, your premium payments would be throwing money down the drain.
What if you have a pre-existing condition?
One of the Affordable Care Act’s hallmark achievements is its requirement for insurers to provide coverage to individuals with pre-existing conditions. However, Medicare A and B are not subject to the ACA. Thus, you’ll want a Medigap plan to ensure coverage. You are guaranteed to get Medigap if you enroll as soon as you become eligible for Medicare. Otherwise, you may find yourself in a waiting period.
In sum, if you’re going to enroll in Medicare, enroll sooner rather than later. Your ACA coverage will continue until Medicare and Medigap kick in.
Transitioning from Obamacare to Medicare can be tricky. Remain cognizant of the dates and deadlines to avoid any gaps in coverage. Remember, you should always switch to Medicare if you’re eligible for premium-free coverage, You’ll also be automatically enrolled upon your 65th birthday if you’ve been receiving Social Security payments. Either way, it’s time to terminate your ACA coverage to avoid paying premiums that don’t serve you.
Need further guidance on how to move from Obamacare to Medicare or the Affordable Care Act? Our advisors at Coverage2Care are here to help. Reach out today with your questions.