For Professionals: Health Care Reform

Frequently Asked Questions About Medicare and Covered California

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Updated: Jan 23, 2014

The Affordable Care Act (ACA), sometimes called Obamacare, established certain standards for the sale of health insurance to people who are not covered by Medicare. The ACA 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 the plans or programs. Covered California is the name of the exchange/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 also covers younger people: those who are disabled and collecting 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.

The ACA prohibits insurance carriers from denying health insurance coverage to anyone because of a pre-existing medical condition. However, this ban on pre-existing conditions does not apply to Medicare because Medicare covers all pre-existing health conditions from the first day benefits are available. This ban also does not apply to Medigap policies that are regulated under previous federal and state laws.

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. Also, see our chart for a graphical way to view this information. 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 Premium-Free Medicare Part A

  1. I am on 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, at a minimum, Medicare Part A, 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 calculated based on income and some other criteria, some people who only have Part B may not incur the tax penalty.  For more information, call Covered California at 1-800-300-1506.

  2. If I 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 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 can buy other coverage to supplement your Medicare benefits in several different ways. Please see our sections on Medicare Advantage, Medigap and Other Health Insurance.

  3. 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.

  4. 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. However, insurance companies are required to issue dental coverage to children without health screening and are required to cover certain services.

  5. If You Are Required to Pay the Premium for Medicare Part A

  6. 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? According to federal guidance , people who are not enrolled in Medicare and would have to pay a premium for Part A 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 paying for Medicare. This federal guidance does not address the issue of someone whose income is above 400% of the FPL and is ineligible for a premium tax credit and whether that person can buy a QHP instead of Medicare. It also does not address the issue of whether a person in this situation whose income is between 100% and 250% of the FPL is eligible for any cost-sharing subsidy. 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. The out-of-pocket costs for Medicare Parts A, B, and D include: premiums, deductibles, copayments and coinsurance. Costs for QHPs also include premiums, deductibles, and copayments of various amounts. In addition, many QHPs and Medicare Advantage plans require the use of a network, which may or may not include the health care providers you use. Original Medicare, however, does not require you to use network health care providers. Covered California’s QHPs and Medicare Advantage plans also have an annual out-of-pocket limit while Original Medicare does not. In other words, QHPs and Medicare Advantage plans set a limit on how much you spend on deductibles, copayments and coinsurance per year; if you reach that limit, the plan pays for all covered services for the reminder of the year. Medicare has no annual limit.

    If you are eligible for a premium tax credit through Covered California, be aware that any credit you receive for your QHP may lower your costs below what you would pay in Medicare. The premium tax credit can change if your monthly income changes. All of these factors need to be considered, including if you decide to buy a QHP now but later decide to enroll in Medicare. , If you enroll later, you may be charged a late enrollment penalty for Parts A and B and possibly Part D, and there will be a delay of several months before those benefits begin.

    NOTE: If you have prescription drug coverage that is as good as or better than Medicare’s, known as creditable coverage, you will not be assessed a late enrollment penalty for Part D if you enroll within 63 days of losing those benefits. See our section If You Already Have Drug Coverage for more info on creditable coverage.

  7. I have been paying premiums for Medicare Part A. Can I stop paying Part A premiums and enroll in a QHP instead? Recent information from the federal government indicates that if you are enrolled in Medicare Parts A and B and paying premiums for both Parts, you can buy a QHP instead, but you would have to disenroll from both parts of Medicare first. You cannot have Medicare if you want a QHP because the QHP would duplicate your Medicare benefits. If you decide to buy a QHP now but later decide to reenroll in Medicare, you may be charged a late enrollment penalty for Parts A and B and possibly Part D, and there will be a delay of several months before those benefits begin.

    You need to carefully compare both the benefits and the costs of any health insurance plan you are considering to those of Medicare. The out-of-pocket costs for Medicare Parts A, B, and D include: premiums, deductibles, copayments and coinsurance. Costs for QHPs also include premiums, deductibles, and copayments of various amounts. In addition, many QHPs and Medicare Advantage plans require the use of a network, which may or may not include the health care providers you use. Original Medicare, however, does not have this network requirement. Covered California’s QHPs and Medicare Advantage plans also have an annual out-of-pocket limit for deductibles, copayments and certain other costs of care, while Original Medicare does not. If you are eligible for a premium tax credit through Covered California, be aware that any amount of tax credit you receive for your QHP may lower your costs below what you would pay for Medicare. The tax credit can change if your monthly income changes. All of these factors need to be considered, including If you decide to buy a QHP now but later decide to reenroll in Medicare, you may be charged a late enrollment penalty for Parts A and B and possibly Part D, and there will be a delay of several months before those benefits begin.

  8. I only have Part B because I would have to pay the premium for Part A and I couldn’t afford it. Can I get medical insurance from Covered California? According to recent information from the federal government, if you did not enroll in Part A because the premium was too expensive and you only have Part B, you can get a QHP but you have to disenroll from Part B. You cannot have either part of Medicare if you want a QHP because the QHP would duplicate your Medicare benefits. If you decide to buy a QHP now but later decide to reenroll in Medicare, you may be charged a late enrollment penalty for Parts A and B and possibly Part D. Please see our answers to #5 and #6 to carefully consider all the factors between these two types of coverage. To speak with someone at Covered California, call 1-800-300-1506.

    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.

  9. Medicare and End Stage Renal Disease (ESRD)

  10. 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 have premium-free Part A. Policies sold through Covered California are intended to be primary coverage. Medicare is your primary coverage, and it is illegal for anyone to sell you coverage that duplicates your Medicare benefits.

    NOTE: This information also applies to people younger than 65 whose 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.

  11. I have been diagnosed with ESRD and will need a transplant. I haven’t yet applied for Medicare. Can I get a QHP instead? According to federal guidance, people with ESRD who have not applied for Medicare are eligible for premium tax credits if their income is between 100% and 400% of the federal poverty limit (FPL). This group can buy a Qualified Health Plan (QHP) instead of enrolling in Medicare. This federal guidance does not address the issue of someone with ESRD whose income is above 400% of the FPL and is ineligible for a premium tax credit and whether they can buy a QHP instead of Medicare. It also does not address the issue of whether a person in this situation whose income is between 100% and 250% of the FPL is eligible for any cost-sharing subsidy.

    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 #5 and 6. You should also know that 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

  12. Medicare and a Qualified Health Plan (QHP)

  13. I am 64 and have coverage through Covered California. What happens when I turn 65? The company that issues your coverage should notify you a few months before your 65th birthday so you can coordinate the end of your current coverage with the beginning of your Medicare benefits. Regardless of any notice you may or may not get, you should be aware that your Medicare open enrollment begins 3 months before your 65th birthday, includes your birthday month and ends 3 months after your birthday month. If you fail to enroll during your 7-month initial enrollment period (IEP), you may be charged a late enrollment penalty and your benefits will be delayed if you enroll later. See our sections on Enrolling in Medicare Parts A and B and Enrolling in Medicare Part D.

    Any premium tax credits or other assistance you are receiving will end once you are eligible for premium-free Medicare Part A. Those 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. People becoming eligible for Medicare are entitled to a 6-month open enrollment period (OEP) 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 described above.

  14. Can an insurance company force me to give up a QHP because I am eligible for Medicare? An insurance company under previous federal law cannot force you to give up individual coverage because you have access to other health benefits including Medicare. How that requirement will work with the new health care law has yet to be determined. While the federal agency responsible for Medicare said it’s illegal to knowingly sell coverage to someone who has Medicare, they have said that people who have individual coverage and later become eligible for Medicare can keep their QHP. However, any premium tax credits or cost sharing subsidies you are receiving will end once you are 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.

  15. 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, you may incur a late enrollment premium penalty and your benefits will be delayed if you decide to enroll in Medicare later. 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, any premium tax credits or cost-sharing subsidies you are receiving will end. People who are eligible for Medicare 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. 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.

  16. 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? There has been no official guidance from federal or state officials on the issue of a person with individual coverage from a QHP who also has Medicare. 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.  Federal Medicare law only addresses this issue of other coverage with Medicare when someone also has benefits through an employer group health plan and they or a spouse are still working, workers compensation, or no-fault or liability insurance. In these cases Medicare would be secondary to those benefits.  Otherwise Medicare is usually primary, except in these very specific situations that do not include an individually purchased QHP.

    A person with Medicare and a QHP would potentially have primary coverage from 2 sources: Medicare and the QHP.  Under state insurance law an individual cannot generally collect full benefits from each of 2 policies that duplicate each other.  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 for secondary payment. In addition, a person with Medicare would no longer receive any premium assistance under the federal law. While previous federal law makes it illegal for insurance companies to sell coverage that duplicates Medicare’s coverage when someone is entitled to Medicare Part A or Part B, there has been no guidance on the issue of someone who already has individual health insurance and then 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.

Also see our quick reference chart: Medicare & Covered California: Can I Buy a Qualified Health Plan?

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