The Affordable Care Act (ACA) and Medicare

The Affordable Care Act (ACA), also known as Obamacare, was enacted in March 2010 and heralded the biggest change in the US healthcare system since the creation of Medicare and Medicaid in 1965. Following the passage of the law, there was the creation of a Health Insurance Marketplace where anyone can get health insurance at an “affordable” price, since private health insurance plans have been subsidized by the government.

If you’ve been following the news at all, you’ve seen where major insurance companies have drastically shrunk the number of states they participate in, or dropped out altogether. For those who have stayed, premiums have skyrocketed. The recent presidential election has thrown a new spotlight on Obamacare, as Trump has indicated he’d support repealing ACA altogether. Politics and news coverage aside, I thought I’d spend a bit of time covering ACA as it relates to your Medicare coverage. The following are some salient facts that you need to know about the ACA, with some special emphasis on ACA and Medicare.

1. Medicare Coverage Is Protected

One important fact to recognize is that the Health Insurance marketplace does not include Medicare. This means that your Medicare coverage will not be interfered with in any way. It also means that once you have been covered under Medicare, you do not have to do anything with the marketplace during the open enrollment period.

However, people who only have Medicare Part B health insurance (which covers outpatient services) are not considered to be adequately covered and are required to supplement their insurance coverage. A failure to do this may lead to paying of a fee that is charged on those who do not have insurance. This is due to the fact that the ACA has an individual mandate included, which requires everyone eligible for health insurance cover to buy it. This is done so as to avoid healthy people from delaying getting health insurance cover until they fall sick, which something that will increase costs for everyone and lead to fewer people affording health insurance.

In 2016, the fee for not having minimum essential coverage is 2.5% of your household income or $695 per adult and $347.5 per child, whichever amount is higher.

2. Can You Choose Marketplace Coverage Instead of Medicare?

The simplest answer to this is yes, but you won’t want to do it in almost all cases.  If you’re currently on an ACA plan and turn 65 or are otherwise eligible for Medicare, you can technically keep your ACA plan. You won’t want to do that, as benefits under Original Medicare or a Medicare Advantage plan are far better and in almost all cases, cheaper than an ACA plan. However, the federal government won’t actually force you to drop your ACA plan, you must do it yourself. There are a few situations in which this scenario might be possible, for example:

If you happen to be paying monthly premiums for Part A, you can opt out of Medicare Part A and B and have a marketplace plan instead if this serves your situation better. This is highly unlikely, as most people do not pay monthly premiums for Part A because they paid for it through their taxes when they were working before turning 65.

3. Can You Get a Marketplace plan in Addition to Medicare?

It is actually illegal for anyone to offer you a marketplace plan if they know or if you already have Medicare coverage. This applies even to cases where you have either Part A or Part B. If you feel the need to plug a gap in your Medicare coverage, then the right thing to do is adding on supplemental Medicare insurance, also known as Medigap insurance. It is also not possible to purchase a standalone dental plan on the marketplace if you have Medicare coverage.

4. Cancelling Your ACA Plan When you Get Medicare

You can do this online. Click here and follow the directions.

The Takeaway:

Once you turn 65, or are otherwise eligible for Medicare, you don’t need your ACA plan any longer. If you have a Marketplace plan, you can keep it until your Medicare coverage starts. Then you can end your Marketplace plan without penalty. However, you’ll have to take action to cancel your ACA policy as soon as your Medicare coverage begins. The government won’t cancel it for you, you have to do it. If you don’t, you’ll essentially be left paying your applicable Medicare premiums as well as your ACA plan premium, even though you can’t use the ACA plan any longer to pay for your healthcare.