Many people wonder how Medicare and ACA Marketplace insurance plans interact, whether they can keep their Marketplace coverage after enrolling in Medicare, and what happens to any premium tax credits they are receiving.
While Medicare and the ACA Marketplace both provide valuable health insurance options, they serve different populations and have distinct rules. Once you become eligible for Medicare, it’s generally best to transition from your ACA Marketplace plan to Medicare, as you will no longer be eligible for the premium tax credits that make ACA plans affordable.
What is Medicare and what it covers
Medicare is a federal health insurance program for people aged 65 and older as well as younger individuals with qualifying disabilities or end stage renal disease. Here is a quick look at some basic parts of Medicare:
- Part A (Hospital Insurance): Covers inpatient hospital care, skilled nursing facility care, hospice care, and some home health care. There are 4 main parts of Medicare
- Part B (Medical Insurance): Covers outpatient services like doctor visits, preventive services, and durable medical equipment.
- Part C (Medicare Advantage): An alternative to Original Medicare that offers all Part A and B benefits through private insurance companies. Many Part C plans also include Part D coverage and additional benefits like vision, dental, and prescription drugs.
- Part D (Prescription Drug Coverage): Helps cover the cost of covered prescription medications.
What Is the ACA Marketplace
The Affordable Care Act (ACA) created the Health Insurance Marketplace (also known as the Exchange) to provide health coverage to individuals and families who do not have access to employer-sponsored insurance or other forms of coverage, like Medicare or Medicaid. Through the Marketplace, people can purchase private health plans that meet ACA requirements, such as covering essential health benefits and preventive care.
One of the key benefits of the ACA Marketplace is the availability of premium tax credits and cost-sharing reductions for eligible individuals, which help lower the cost of monthly premiums and out-of-pocket expenses based on income.
Agents -Watch a quick YouTube video on how to get contracted to sell ACA plans
Can You Have Medicare and an ACA Marketplace Plan at the Same Time
It is not legal for any agent/broker to enroll a Medicare beneficiary in an ACA plan. This is true even if the beneficiary has Mediare Part A or Part B only.
Medicare Eligibility Automatically Ends ACA Premium Tax Credits:
When an individual becomes eligible for Medicare, they are no longer eligible for the premium tax credits that reduce the cost of ACA Marketplace plans. Those who recieve these subsidies, will lose them once they are eligible for Medicare, even if thye have not enrolled in Medicare yet.
Therefore, the cost for a Marketpalce plan for those who choose not to enroll in Medicare will pay a much higher price once they lose the premium tax credits. In most cases, Medicare will offer better or comparable coverage at a lower cost than a Marketplace plan without subsidies.
What Happens If You Delay Medicare Enrollment
Some people may want to delay Medicare enrollment because they prefer their ACA Marketplace coverage or want to keep the premium tax credits. However, delaying Medicare enrollment can result in financial penalties down the road.
Late Enrollment Penalties
- Part A: If you are eligible for premium-free Medicare Part A (based on your or your spouse’s work history), you should enroll as soon as you’re eligible because there’s no cost and it can help cover certain hospital expenses. If you don’t qualify for premium-free Part A and delay enrolling, you could face a late enrollment penalty if you decide to sign up later.
- Part B: Medicare Part B comes with a standard monthly premium, and if you don’t sign up when you’re first eligible, you may face a 10% penalty for each 12-month period you delay enrollment unless you have other creditable coverage (like employer-sponsored insurance).
In most cases, enrolling in Medicare as soon as you’re eligible helps you avoid penalties and ensures that you have comprehensive coverage.
Medicare vs. ACA Marketplace Plans Comparison
| Feature | Medicare | ACA Marketplace |
|---|---|---|
| Eligibility | Age 65+ or younger with disabilities | Individuals and families without access to other insurance |
| Premium Assistance | No premium subsidies (except for low-income assistance programs like Medicaid or Medicare Savings Programs) | Premium tax credits and cost-sharing reductions available based on income |
| Types of Coverage | Hospital (Part A), Medical (Part B), Drug (Part D), Medicare Advantage (Part C) | Private insurance plans covering essential health benefits |
| Prescription Drug Coverage | Separate (Part D) or included in Medicare Advantage | Often included in Marketplace plans |
| Penalties for Late Enrollment | Yes, for Part A and B (unless you qualify for special enrollment periods) | No late enrollment penalties |
| Cost | Monthly premiums vary, and most individuals pay a standard amount for Part B | Varies based on income and plan selection; premium tax credits available for eligible individuals |
Transitioning from an ACA Marketplace Plan to Medicare
Individuals approaching Medicare eligibility who currently have an ACA Marketplace plan, must plan for the transition to Medicare. Here are a few things to remember:
Enroll in Medicare on Time
Most people are automatically enrolled in Medicare Part A and Part B if they’re receiving Social Security benefits. those who have delayed recipt of Social Security benefits will need to sign up during their initial enrollment period (IEP). The IEP starts three months before your 65th birthday and ends three months after.
Drop Your ACA Marketplace Plan
Once Medicare coverage starts, individuals are no longer eligible for Marketplace premium tax credits, therefore it’s important to cancel the ACA plan to avoid paying for unnecessary coverage.
Consider Additional Coverage
Depending on individual healthcare needs, enrollees may want to consider a Medicare Advantage plan (Part C) or a Medicare Supplement (Medigap) plan and a Part D plan for prescription drug coverage. These plans can provide coverage for out-of-pocket costs like deductibles, copays and coinsurance.
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