The Affordable Care Act (ACA), sometimes called Obamacare, established standards and requirements for health insurance for people not covered by Medicare. It also established exchanges or Marketplaces where people can compare the benefits and costs of various medical insurance plans, find out if they might be eligible for a variety of public programs and benefits, and enroll in health plans or programs. Covered California is the name of the Marketplace in California.
The Medicare program covers people 65 and older who have contributed to Social Security during their working years for 40 or more quarters, or are married to someone who has. Medicare can also cover younger people: those who are disabled and collected Social Security Disability Insurance for 24 months, those who have permanent kidney failure known as end stage renal disease or ESRD, and those who have been diagnosed with Amyotrophic Lateral Sclerosis (ALS), better known as Lou Gehrig’s Disease.
Some people who are not entitled to Medicare may be able to buy it if they meet certain age and residency requirements. These individuals will have to pay the premium for Medicare Part A that other individuals who are entitled to Medicare get for free (premium-free Medicare). Below are answers to some of the most common questions we at California Health Advocates (CHA) have received about the ACA and Covered California from people with Medicare, their families or their advocates. It’s important to understand that some answers apply only to people who are entitled to “premium-free” Medicare and others apply only to those individuals who are not entitled to Medicare but can or did buy it and have to pay the Part A premium.
CAUTION: Our answers are based on our current understanding of federal guidance from the Medicare program, the IRS, and other federal agencies concerned with implementing the ACA. Future federal guidance on some of these situations may require us to update our answers to these and other complex questions about the interaction of these 2 federal programs.
If You Have Or Are Entitled To “Premium-Free” Medicare Part A:
- I am covered by Medicare. Do I have to do anything to meet the requirement to have health insurance in 2014? Will I have to pay a penalty? If you have Medicare Part A at a minimum, you don’t need to do anything and you won’t have a penalty. The IRS has determined that Medicare Part A satisfies the requirement to have health insurance with minimum essential health benefits. Part B alone, however, does not meet the requirement for minimum essential health benefits. Since the tax penalty is based on income and other criteria, some people who only have Part B may not be required to pay the tax penalty. The federal government has created various exemptions from this tax penalty in recent months. For more information, see the IRS’ website section on exemptions.
- I already have Medicare. Can I also buy a health plan from Covered California? Your Medicare benefits are your primary health care coverage. It is illegal under federal law for someone to knowingly sell you coverage that duplicates what Medicare already provides. Qualified health plans (QHPs) sold through Covered California are not designed to work with Medicare. You cannot buy other coverage to supplement your Medicare through Covered California. Please see the answer to #4 and our sections on Medicare Advantage, Medigap and Other Health Insurance for information on buying other coverage to supplement your Medicare benefits.
- Can I drop Medicare and get a health plan through Covered California instead? Yes, but you will have to pay back any Social Security, Railroad, or disability benefits you’ve received plus any amounts Medicare paid for your health care since you became eligible.
- Can I buy a Medigap policy or a Medicare Advantage plan through Covered California? No, Medigap or Medicare supplement insurance policies and Medicare Advantage plans are not sold through Covered California. These plans are intended to defray some of the out-of-pocket costs for Medicare-covered services. Medigap policies and Medicare Advantage plans are sold by insurance companies or by their agents. Some Medigap plans are also sold through the mail. For a list of companies that sell Medigaps and their 800 number, go to the Department of Insurance website. To find a Medicare Advantage plan in your area and/or for individual assistance call your local Health Insurance Counseling and Advocacy Program (HICAP) at 1-800-434-0222. Also, see our sections: Medigap and Medicare Advantage.
- Can I buy dental coverage through Covered California? Dental coverage for adults is not currently available through Covered California. The new health care law does not require insurance companies to issue dental coverage to adults or to waive pre-existing conditions, nor does it require minimum benefits or limits on the premium for adults. However, insurance companies are required to issue dental coverage to children without health screening and are required to cover certain services.
If You Are Required to Pay the Premium for Medicare Part A
I will have to pay a premium for Medicare Part A when I enroll in Medicare. Can I buy a health plan from Covered California instead? According to federal guidance, people who have to pay a premium for Part A can buy a Qualified Health Plan. They may also be eligible for premium tax credits if their income is between 100% and 400% of the federal poverty limit.
If you consider buying a QHP instead of paying for Medicare you need to carefully compare both the benefits and the costs of any health insurance plan you are considering to those of Medicare. Here are some differences to consider:
- Medicare and QHPs both have out-of-pocket costs for premiums, deductibles, and varying amounts you have to pay when you use a covered service. All of these can change annually.
- QHPs and Medicare Advantage plans set an annual limit on the out-of-pocket expenses you pay each year; Original Medicare does not.
- QHPs and Medicare Advantage plans require the use of a network that may not include all the health care providers you use, or the hospital where your doctor admits patients. Original Medicare does not.
- If you change your mind in future years and want to get Medicare, you will have to pay late enrollment penalties and there may be a delay of several months before benefits will begin.
If you decide to keep your Part B and buy a QHP but later decide to re-enroll in Medicare Part A, you may be charged a late enrollment penalty. If you give up your Part B and later decide to re-enroll, you may also be charged a late enrollment penalty, and possibly for Part D as well if the QHP doesn’t provide prescription drug coverage as good as Medicare’s. In addition to the late enrollment penalties, you will have a delay of several months before Medicare benefits will begin. Please see our answers to #6 to carefully consider all the factors between these two types of coverage. Also note that if you have Medicare Part B with a QHP, there has been no state or federal guidance on how the benefits of a QHP will be paid when someone also has Medicare.
NOTE: If you only have Part B and you have a low-income, you may qualify for one of the Medicare Savings Programs called Qualified Medicare Beneficiary program (QMB) that would pay for your Medicare Part A premium. See our Medicare Savings Program section for more info.
Medicare and End Stage Renal Disease (ESRD)
- I have Medicare because I have end stage renal disease (ESRD) and I am no longer working. No one will sell me a Medigap and I need insurance to pay what Medicare doesn’t pay. Can I buy a policy from Covered California? You cannot buy additional coverage through Covered California if you already have premium-free Medicare. Policies sold through Covered California are intended to be primary coverage. Medicare is your primary coverage, and it is illegal for anyone to knowingly sell you coverage that duplicates your Medicare benefits.
NOTE: This also applies to people younger than 65 whose Medicare benefits begin the first month they receive disability benefits because they have Amyotrophic Lateral Sclerosis (ALS), better known as Lou Gehrig’s Disease, and to people younger than 65 who have Medicare because of a disability and are receiving Social Security Disability Insurance. See our Medigap section for more info on these Medicare supplement policies.
- I have been diagnosed with ESRD and will need a transplant. I haven’t yet applied for Medicare. Can I get a QHP instead? People with ESRD who have not applied for Medicare can buy a QHP and are eligible for premium tax credits if their income is between 100% and 400% of the federal poverty limit. This group can buy a Qualified Health Plan (QHP) instead of enrolling in Medicare. If you are considering a QHP instead of Medicare, you should carefully compare all the costs and benefits associated with both a QHP and Medicare before making your decision. Please read the answer to #6.
NOTE: In addition, if you do not enroll in Medicare Part A before you have a transplant, you will not be eligible for Medicare’s immunosuppressive medication benefit under Part B, even if you decide to enroll in Medicare later. In addition, you might be charged a late enrollment penalty and have a delay before benefits begin if you apply for Medicare in the future. For more help with this difficult decision, contact your local HICAP for assistance.
- I have ESRD and am already on Medicare. Can I give up my Medicare benefits and buy a QHP instead? You can drop your Medicare, but you will have to pay back any Social Security, Railroad, or disability benefits you’ve received plus any amounts Medicare paid for your health care since you became eligible.
Medicare and a Qualified Health Plan (QHP)
- I am 64 and have coverage through Covered California. What happens when I turn 65? You may or may not receive any formal notice of your Medicare Initial Enrollment Period (IEP) from the company that issued your coverage. When initially eligible for Medicare, ou have 7 months to sign up for Parts B and D. This IEP begins 3 months before your 65th birthday, includes your birthday month and ends 3 months after your birthday month. See our sections on Enrolling in Medicare Parts A and B and Enrolling in Medicare Part D. In addition, People becoming eligible for Medicare are entitled to a 6-month open enrollment period to purchase Medigap coverage that will pick up some or all of Medicare’s out-of-pocket costs, or they can enroll in a Medicare Advantage plan during their 7-month IEP. Any tax credits or cost-sharing subsidies you’ve been receiving to reduce your QHP premium and out-of-pocket costs will end when you become eligible for premium-free Medicare regardless of whether you are enrolled in Medicare or not. If you fail to enroll in Medicare during this 7-month period you may be charged a late enrollment penalty if you enroll later and your benefits will be delayed. See our sections on Enrolling in Medicare Parts A and B and Enrolling in Medicare Part D. You will need to coordinate the beginning of your Medicare benefits with terminating your QHP coverage to avoid any gaps in coverage. Call Covered California at 1-800-300-1506 for help.
- Can an insurance company force me to give up a QHP because I am eligible for Medicare? An insurance company cannot force you to give up individual coverage because you have access to other health benefits including Medicare. However, any premium tax credits or cost-sharing subsidies you are receiving will end when you become eligible for Medicare. People who are eligible for premium-free Medicare Part A are not eligible for any premium tax credits or cost-sharing subsidies whether they enroll in Medicare or not.
- What happens if I have a QHP when I become eligible for Medicare and decide to keep it and not take Medicare? If you are eligible for premium-free Medicare Part A and you keep the QHP any premium tax credits or cost-sharing subsidies you are receiving will end. People who are eligible for premium-free Medicare Part A are not eligible for any premium tax credits or cost-sharing subsidies whether they are enrolled in the Medicare program or not. In addition, you may incur a late enrollment premium penalty if you decide to enroll in Medicare later and your benefits will be delayed. When initially eligible for Medicare, you have 7 months to sign up for Parts B and D. This time, called the initial enrollment period (IEP), begins 3 months before your 65th birthday, includes your birthday month and ends 3 months after your birthday month. See our sections on Enrolling in Medicare Parts A and B and Enrolling in Medicare Part D. In addition, People becoming eligible for Medicare are entitled to a 6-month open enrollment period to purchase Medigap coverage that will pick up some or all of Medicare’s out-of-pocket costs, or they can enroll in a Medicare Advantage plan during their 7-month IEP.
- If I keep a QHP after I become eligible for Medicare and take Part A because it’s free but don’t take Parts B and D because I don’t want to pay the extra premiums, how would my benefits be paid? Medicare would be primary in this situation. There has been no official guidance from federal or state officials on how the benefits of a QHP would be coordinated or paid. We know that all premium assistance will stop when someone is eligible for Medicare, but we don’t know how the QHP benefits will be paid when someone also has Medicare. Federal Medicare law only addresses the order of payment with Medicare when someone has benefits through an employer group health plan and they or a spouse are still working, or are covered by workers compensation, or by no-fault or liability insurance. In those cases Medicare would be secondary to those benefits, not primary.
A person with both Medicare and a QHP would potentially have primary coverage from 2 sources: Medicare and the QHP. No federal law addresses this situation. Under state insurance law an individual generally cannot collect full benefits from each of 2 policies that together pay more than an insured event costs. State law usually specifies how insurance companies will coordinate health benefits when a person has primary coverage from more than one source. In that situation, insurance companies determine which coverage is primary and which is secondary. It’s important to understand that a QHP is not structured to pay secondary benefits, nor are the premiums calculated or adjusted for secondary payment. In addition, a person with Medicare would no longer receive any premium assistance or subsidies under the federal law. While previous federal law makes it illegal for insurance companies to knowingly sell coverage that duplicates Medicare’s coverage when someone is entitled to or enrolled in Medicare Part A or Part B, there has been no guidance on the issue of someone who already has individual health insurance and then also enrolls in Medicare. We and other consumer organizations have asked state and federal officials for clarification on this complicated situation.
If you need help deciding what benefits to sign up for, please contact your local Health Insurance Counseling and Advocacy Program (HICAP) for assistance at 1-800-434-0222.