Medicare vs. the Marketplace insurance plans
August 1, 2017
What is a Health Insurance Marketplace plan? If I have a Marketplace plan and I become eligible for Medicare should I switch? What are the advantages of Medicare over the Marketplace? How do I disenroll from my Marketplace plan? What if I didn’t switch to Medicare when I could have? What is Time Limited Equitable Relief and do I qualify for it?
These are a few of the questions many people turning 65 are asking and we will try to answer for you.
What is the Health Insurance Marketplace?
First of all, let’s define the Health Insurance Marketplace also referred to as the Marketplace. The Health Insurance Marketplaces were implemented through the Affordable Care Act (ACA) and began in October 2013. The Marketplaces allow people who either do not have insurance or do not have enough adequate insurance the ability to purchase health care coverage. Some states set up their own marketplace while others such as Alaska chose to use the federal Marketplace to provide plans. You can contact the Marketplace by going online to http://www.healthcare.gov or calling 1-800-318-2596 for assistance in enrolling in a plan.
These plans are called Qualified Health Plans (QHPs). People who meet certain income limits can be eligible for cost assistance, also known as advanced payments of the premium tax credits (APTC) or income based cost-sharing assistance reductions (CSRs) which can lower the monthly cost of the plan premium.
Should I switch to Medicare when eligible?
Most people who become eligible for Medicare should not use the Marketplace to obtain or continue their medical insurance coverage for a couple of reasons. Those APTC and CSRs subsidies often go away once you are eligible for Medicare, and the Marketplace plan may not cover you as well. Also, you cannot purchase any of the other parts of Medicare like a Medicare Advantage plan (not available in Alaska), Part D prescription drug coverage, or Medicare Supplement coverage (Medigap) through the Marketplace. Medicare is less expensive than the QHPs once the cost assistance is no longer available.
Medicare Part A is considered minimum essential coverage (MEC). This means that it meets the required criteria for coverage and you would not be hit with a penalty if you have Part A and no QHP. Part A is a QHP. Medicare Part B by itself does not meet these criteria and you would get a penalty if you signed up for Part B alone. The best choice is to sign up for both Medicare Part A and Part B when eligible. If you have Medicare Part A and Part B, you do not need to have a QHP and in fact it is illegal for anyone to sell you a Marketplace plan.
Exceptions to consider
There are two instances when it may be beneficial for you to choose a Marketplace plan or QHP over Medicare. The first is if you have to pay a premium for Part A (most people do not pay a premium for Part A) It may be less expensive to keep the QHP with the cost assistance, however, be warned that if you choose to stay in a QHP and you later decide to enroll in Part A, you have to wait for the General Enrollment Period (GEP) which is January 1 to March 31 each year to enroll. Additionally, your coverage will not start until July 1 of that year so you may experience a gap in your coverage and you may have to pay a late enrollment penalty for twice the number of years that you delayed enrolling. But then the penalty will drop off.
The other instance is when you are eligible for Medicare due to End Stage Renal Disease (ESRD). ESRD is renal disease that requires dialysis or a kidney transplant. If you have ESRD at any age you become eligible for Medicare. You can choose to enroll in a QHP with cost assistance or keep your current Marketplace coverage if you are already in a QHP. Or you may choose to enroll in Medicare. Depending on where you live, Medicare may offer a wider group of providers to care for you. It is a good idea to contact the Medicare Information Office at 1-800-478-6065 (toll-free in Alaska) to discuss and compare costs and coverage. You can also seek guidance from a social worker at your dialysis center.
When should I enroll in Medicare?
The best time to Enroll in Medicare is during your Initial Enrollment Period (IEP). This is the seven month enrollment window around your 65th birthday or the seven month enrollment window around your 25th month of receiving Social Security Disability Insurance benefit. The seven months start 3 months before the month of your birthday includes the month of your birthday and ends three months after the month of your birthday.
If you are receiving Social Security retirement benefits or SSDI benefits, you may be auto enrolled in Medicare. Enrollment in Medicare is done through the Social Security Administration (SSA) online at ssa.gov, by calling toll-free, 1-800-772-1213 or by making an appointment at your local SSA office.
When should I disenroll in the QHP?
You will want to notify your QHP that you are going to be receiving Medicare and want to disenroll. Alaskans with the Federal Marketplace plans can set up disenrollment by visiting http://www.healthcare.gov or by calling 1-800-318-2596. You will want to allow 14 days for processing the disenrollment in order to avoid paying for two premiums and also avoid any gap in coverage.
Time limited equitable relief
Many people were confused about the rules for transitioning from the Marketplace plans to Medicare and may have not signed up for Medicare Part B when eligible or signed up later than their IEP and now are paying a penalty. There may be some help available.
The government is currently offering the Time Limited Equitable Relief program. This program will be available until Sept. 30, 2017, and will give individuals the opportunity to enroll in Part B if they neglected to during their IEP and/or may reduce or eliminate the Part B Late Enrollment Penalty (LEP) they may be paying.
The criteria for using this program is: You must be eligible for premium free Part A, (if you are eligible but have not enrolled you may do so at any time), you must be enrolled in a Qualified Health Plan (QHP) and you have an IEP that began on April 1, 2013, or later OR you were notified of retroactive premium-free Part A on Oct. 1, 2013, or later.
Individuals who want to access the equitable relief should contact the Social Security Administration via phone at 1-800-772-1213 or by making an appointment to visit your local Social Security office (this also can by done by calling the toll-free number). You must request what equitable relief you are seeking; enrolling in Part B of Medicare without penalty or reduction or elimination of the LEP. You need to mention that you were enrolled in both premium-free Part A and a QHP.
Be sure to provide the following documentation to assist in this process.
Proof that you are enrolled in a QHP such as a letter you received about being enrolled in Medicare and a QHP, the IRS form 1095-A that shows the months of coverage and/or cost assistance amounts, or a receipt from the first premium payment you made to your QHP.
Remember that this progam is only offered until Sept. 30, 2017, so if you feel you are eligible, don’t delay. If you have further questions, contact the Medicare Information Office at 1-800-478-6065.
Nila Morgan is a Certified Medicare Counselor and Medicare Fraud Education Coordinator who works at the Anchorage Senior Activity Center.