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Do ACA and Medicare Work Together?

If you've taken advantage of health insurance discounts through the Affordable Care Act, you may worry about your costs when transitioning to Medicare. Many people have concerns about the ACA in relation to Medicare.
Can you have an insurance plan from the ACA with Medicare? Should people who are turning 65 continue with their ACA plan instead of opting for Medicare? If these questions have crossed your mind, then this article will provide clarity.

The interplay between Medicare and the Affordable Care Act (ACA) has often perplexed its recipients since the law's inception. If you possess an ACA plan via the Marketplace, it's yours to keep until you activate your Medicare. Once Medicare kicks in, you can end your ACA plan without any repercussions.

Medicare Eligibility and ACA

It's a good idea to hop onto Medicare as soon as you qualify. When you start using your no-cost Part A Medicare perks, you'll have to say goodbye to any discount (like a subsidy) you might be enjoying with your ACA plan.

Sticking with your ACA plan? Keep in mind that without the subsidy, you'll be on the hook for the full cost, which can be a big jump if you've been enjoying a major discount.

Here's a kicker: if you decide to keep your Obamacare plan and skip Medicare when you turn 65, you're setting yourself up for a Part B late enrollment fine. This isn't a one-time slap on the wrist. We're talking about a 10% penalty every year from when you first could've gotten Medicare. Did you wait two years? That's a 20% added cost to your Part B monthly premium for as long as you have Medicare. Ouch!

If your ACA plan has been easy on the wallet thanks to a subsidy, this might be a bummer. But, it is better to be in the know now and pivot to Medicare as planned than to face those pesky fines later on.

binder with ACA and Medicare rulesFrequently Asked Questions About the ACA and Medicare

We’ve answered the question about how ACA and Medicare work together. (They don’t.) Now, let’s go through some other frequently asked questions regarding this topic.

If I’m enrolled in Medicare, do I need to do anything to avoid an ACA penalty?

When you're set with Medicare, it's time to wave goodbye to your ACA plan. You don't need both. But be careful because your ACA plan won't vanish on its own. You must call the Healthcare Exchange and ask them to cancel it. 

Should I sign up for an ACA plan in addition to Medicare?

No. Legally speaking, no one can sell you an ACA-approved health plan if you're already enrolled in Medicare. The two plans don’t coordinate benefits, so it wouldn’t do you any good to have both.

If you have an ACA plan or a short-term medical policy, you should drop it once you move to Medicare. Lots of folks get short-term insurance as a way to bridge the gap between their employer-sponsored health plan and Medicare. Once you turn 65 and are eligible for Medicare, you won’t need other health insurance.

Can I choose an Obamacare plan instead of Medicare?

If you're in the majority of beneficiaries who are eligible for premium-free Part A, trading Medicare for an ACA plan isn't an option. ACA wasn't built to be a Medicare substitute. Did you forget to jump on the Medicare bandwagon during your first sign-up chance? Brace yourself for some hefty fees if you decide to join later.

Plus, once you're eligible for Medicare, the ACA discounts (premium tax credits) that made your ACA plan a bargain are off the table.

Are there any exceptions to these rules and recommendations?

There's just ONE little twist. If you haven't put in enough work years to get premium-free Part A, you might think of going the ACA-approved health plan route. It's not uncommon to see newcomers to the country choosing ACA simply because they haven't racked up enough credits for premium-free Part A.

But it's not all smooth sailing if you go this way. First, if you decide to circle back to Medicare, you might end up coughing up penalties for late enrollment for both Parts A, B, and even Part D.

Without a premium subsidy, ACA plans can feel a tad pricier compared to Medicare. Often, even shelling out for Medicare Part A could be a better deal both in terms of benefits and budget than an ACA plan.

When Should I Cancel My ACA Plan?

Aim for no gaps in your health coverage. Call the Exchange and ask them to terminate your plan a day before your Medicare coverage begins.

Don't roll the dice on your health by ditching ACA too soon. Be sure there are no gaps in your coverage so you don’t find yourself without health insurance.

Ready for peace of mind with your Medicare choices? Let Local Medicare Specialists guide your journey. Reach out now and secure your health's future!

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