The Affordable Care Act (ACA) was passed in 2010 with major provisions taking effect in 2013. The law was a complete overhaul and expansion of the healthcare system in America, perhaps the biggest overhaul to date and a significant federal move since the passage of Medicare and Medicaid in 1965. Although the ACA (also called Obamacare) made some changes to Medicare, it does not replace the entitlement program for seniors. Medicare is not part of the health insurance marketplace, and if you have Medicare, you don’t have to make changes relating to Obamacare. However, there are features of the ACA that can affect your coverage.
Medicare and the Marketplace
You cannot enroll in an insurance plan from the ACA marketplace if you’re enrolled in Medicare already. In fact, it’s illegal for an insurance agent to sell you a policy through the marketplace knowing that you have Medicare.
If you’re enrolled in an insurance plan through the marketplace when you become eligible for Medicare, you can keep the plan you have in the marketplace, but you cannot coordinate benefits between the two plans. Your marketplace insurer is not required to pay any claims if you have Medicare, and Medicare does not coordinate benefits if you’ve got a marketplace plan in place. Also, you will lose any subsidies that you’re receiving for your marketplace plan once you sign up for Medicare Part A, since this counts as minimum essential coverage under the law.
Those who purchase health insurance benefits through a Small Business Health Options Program can usually keep the plan along with a Medicare plan, and benefits will coordinate (meaning in this case that the SHOP plan pays claims first, followed by Medicare).
If you become eligible for Medicare, which happens for most people when they turn 65, you can cancel your marketplace plan and enroll in Medicare instead. Notify your marketplace insurer at least 14 days before your Medicare coverage takes effect. Although you’ll lose any premium tax credits once you qualify for Medicare, your Medicare coverage will likely be more affordable than any private plan you could have purchased on the marketplace. If you don’t enroll in Medicare when you’re first eligible but later decide you want to, you could face late penalties and may have a gap in coverage. Late penalties can be significant and permanent.
Choosing Marketplace Plan Over Medicare
You can usually keep employer-sponsored health insurance and original Medicare, but in most cases, you can’t choose a private marketplace (non-job-based) plan over Medicare. There are exceptions, of course, given certain scenarios. Here’s when you might choose and be able to keep a marketplace plan in place:
- You don’t qualify for premium-free Part A because you don’t have enough work history paying Medicare taxes;
- You’ve been diagnosed with a disease that qualifies you for Medicare coverage, such as end-stage renal disease, and you haven’t signed up for Medicare yet but are eligible
- You’re disabled but you’re in a waiting period for Medicare coverage to start
There may be other situations that make it possible and feasible for you to have both private, marketplace-based insurance and Medicare. But in general, the two don’t coordinate with or complement each other.
Supplementing Medicare in the Marketplace
It is not possible to supplement your Medicare plan with a marketplace plan. If you need supplements for your Medicare plan, you may want to look at adding Medicare Part D for prescriptions as well as a Medigap plan. The marketplace does not offer any insurance plans that supplement Medicare, nor can you buy Medicare Advantage plans – which are sold through private companies – from federal or state marketplaces.
Moving from the Marketplace to Medicare
Once you’re eligible for Medicare, you have a 7-month enrollment period to sign up. The initial enrollment period begins three months before your 65th birthday, includes the month of your birthday and ends three months after your birthday month. For example, if your birthday is on July 20, your initial enrollment period begins April 1 and ends October 31. If you enroll in the first three months that you’re eligible, your coverage will begin July 1. If you wait to enroll the month of your birthday or the three months after, your coverage can be delayed as much as three months.
After you sign up for Medicare, you will want to cancel your marketplace plan. If you are the only member of your household, you can simply cancel the plan as soon as Medicare becomes effective. If you and a spouse are on the marketplace plan, but only one of you is eligible for Medicare, you can keep the marketplace plan that covers one of you and cancel the portion that covers the spouse who’s eligible for Medicare.
You will need to determine whether you are the household contact or not as it can make a difference in how you cancel the plan. In most cases, your coverage in the marketplace will end immediately. However, if the policy should remain in effect for another family member, coverage may be cancelled at a later date depending on when the person was removed from the policy. Important note: Don’t cancel your marketplace plan until you’re fully enrolled in Medicare. You want to avoid a gap in coverage, so be sure that you’ve got something in place before you cancel an existing policy.
How the ACA Affected Medicare
The Affordable Care Act (ACA) contained approximately 165 provisions that affected Medicare, including an expansion of benefits. If you have Medicare, you are now eligible for preventive screenings, such as mammograms and colonoscopies, without any added copays or coinsurance. Annual wellness visits were also added under Medicare at no cost.
The law also sought to close the donut hole, lowering how much you must pay before catastrophic coverage kicks in. Before passage of the ACA, you would have had to pay 100 percent of your prescription drug costs when you were in the coverage gap. You’ll now pay a discounted rate for medications. In 2018, you’ll pay 35 percent for brand name drugs and 44 percent for generics. The donut hole is supposed to close by 2020, when you will be responsible for 25 percent of both brand-name and generic drugs after the deductible is met.
Many cost-cutting provisions were added to help put Medicare in a better financial position as well. These provisions will allow Medicare to remain solvent for 11 years longer than before the law was enacted. You might not be able to get a marketplace plan if you have Medicare, but the healthcare law has improved several aspects of the program. Understanding your options for coverage is the first step in choosing a health plan that works for you.