PUBLISHED THU, MAY
26 20229:51 AM EDT Sarah O’Brien@SARAHTGOBRIEN
KEY POINTS
·
If you keep your
health plan through the Affordable Care Act marketplace — whether federal or
state — beyond age 65, you’d generally need to repay any subsidies you received
after that birthday.
·
Whether you’d pay more
for your Medicare coverage depends on the specifics of your situation.
·
If your income is low
enough, you may qualify for help paying for your Medicare plan.
Anyone who gets health insurance through the public marketplace
needs to remember a key part of reaching age 65: switching to Medicare.
Whether
you are automatically enrolled — which happens if you are already
receiving Social Security payments — or you need to
actively sign up, there are rules to be aware of.
For
starters, to avoid late-enrollment penalties that can last a lifetime, anyone
who reaches age 65 should enroll in Medicare unless they have qualifying
coverage elsewhere. And health plans through the Affordable Care Act exchanges,
whether federal or state, do not count.
Here’s
what to know.
The cost
Whether
you’d pay more for your Medicare coverage depends on the specifics of your
situation.
If
you’re receiving subsidies (technically tax credits) that reduce your monthly
premiums or other cost-sharing (i.e., deductibles, copays) for your ACA
marketplace plan, the aid stops when you shift to Medicare.
“There
are some people out there who get their ACA plan very inexpensively because
they qualify for a subsidy that makes the plan really affordable for them,”
said Danielle Roberts, co-founder of insurance firm Boomer Benefits.
“Once
they turn 65, they are no longer eligible for that subsidy,” Roberts said.
If
you were to keep your ACA coverage, the general rule is that you’d need to pay
back any subsidy dollars received after you’ve reached that age.
Roughly 89% (12.9 million) of the
14.5 million people enrolled in ACA plans are receiving
subsidies, which were expanded for 2021 and
2022 due to the American Rescue Plan Act of 2021. Unless
Congress intervenes, that extra financial help will disappear at
the end of this year.
For
original Medicare, most beneficiaries pay no premium for Part A
(hospital coverage), although there are associated deductibles and coinsurance.
For Part B (outpatient care), the standard monthly premium (for 2022) is
$170.10, although higher earners pay more (see chart above).
Part
D (prescription drug coverage) also comes with monthly premiums that average
about $33 this year. However, as with Part B, higher earners pay more for Part
D (see chart below).
Some
people stick with basic Medicare and pair it with a standalone Part D plan and,
perhaps, a Medicare supplement plan (aka “Medigap”),
which covers some deductibles and coinsurance associated with original Medicare
and can cost anywhere from about $100 to $400 a month.
Others
choose an Advantage Plan (Part C), which includes Parts A and B benefits and
typically Part D, as well as some extras like limited dental and vision
benefits. Those plans may or may not have a premium on top of what you pay for
Part B.
If
your income is low enough, you may qualify for Medicare programs that help with
premiums or out-of-pocket costs.
What to watch for
When
you enroll in Medicare, there is no automatic cancellation for your ACA plan,
said Elizabeth Gavino, founder of Lewin & Gavino and an independent broker
and general agent for Medicare plans.
This
means you need to disenroll from your coverage through the exchange.
“Be
careful not to cancel early and leave a gap in coverage between the exchange
and Medicare,” Gavino said. “You want the exchange plan to terminate the day
before the Medicare insurance plan begins.”
Your
initial enrollment period for Medicare begins three months before the month of
your 65th birthday and ends three months after that (seven months total), but the
effective date of coverage depends on when you enroll during that window. The
earlier in your enrollment period you sign up, the faster you have coverage.
“Start
your research early so that you have time to get enrolled in Medicare and set
up for Medigap and Part D or Medicare Advantage coverage in advance of when you
need it and are not scrambling to understand all of the different moving parts
at the last minute,” Roberts said.
Also,
just because you have to move to Medicare doesn’t mean your family coverage
through the exchange has to end.
“A
member can remove just themselves from the exchange plan … without having to
cancel the whole account,” Gavino said.
The price of enrolling late
There
are late enrollment penalties as sociated with some aspects of Medicare.
For
Part B, if you don’t sign up when you’re supposed to, you could face a penalty
that amounts to a 10% higher monthly base Part B
premium for each 12-month period you should have been enrolled
but were not. And those penalties generally are life-lasting.
For
Part D, you also can face a penalty if you decide you want coverage after not
signing up when you were first eligible. That late-enrollment fee is 1% of the
monthly national base premium ($33.37 in 2022) for each full month that you
should have had coverage but didn’t. Like the Part B penalty, this amount also generally
lasts as long as you have the coverage.
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