Older Americans who are eligible for public exchange plan coverage may face traps.
Officials at the Centers for Medicare & Medicaid Services (CMS) write about the complicated financial puzzle facing people with access both to Medicare and to public exchange qualified health plan (QHP) coverage in a new set of answers to frequently asked questions (FAQs).
CMS officials explain how they think Patient Protection and Affordable Care Act (PPACA) exchange plan rules apply to people who have or are eligible for Medicare. Most of those people are Americans ages 65 and older. Some are people with disabilities or people who are getting kidney dialysis and are eligible for Medicare because of their conditions.
The drafters of PPACA tried to keep exchange QHPs from crowding out other forms of health coverage by discouraging or prohibiting people who have other types of coverage from signing up for QHPs. People who already have Medicare coverage cannot normally sign up for individual QHP coverage, the CMS officials write in the new batch of guidance.
People who have Medicare coverage can keep the coverage and also sign up for group QHP coverage through an employer’s Small Business Health Program (SHOP) exchange plan.
People who have Medicare or are eligible for Medicare can also choose to get individual QHP coverage through an exchange instead.
Many retirees have earned enough “work credits” to get Medicare Part A for free. Consumers who do not qualify for free Medicare Part A may have to pay a premium. This year, the maximum premium is $426 per month. What if John Smith, a man who is paying $426 per month for Medicare Part A premiums, wants to get an individual QHP policy that will cost him just $50 per month out of pocket? He can drop Medicare and sign up for the cheaper QHP coverage, officials say.
CMS officials warn, however, that if John Smith were getting Medicare Part A for free, trading Medicare in for QHP coverage could lead to big, unexpected costs: People who are getting free Medicare Part A coverage, then trade in Medicare Part A coverage for individual QHP coverage, will have to drop any Social Security or railroad retirement benefits they’re getting. They also will be responsible for “paying back all retirement benefits and costs incurred by the Medicare program,” officials warn.
If consumers who have used QHP coverage in place of Medicare early in retirement later want Medicare coverage, they could face another trap: Having to pay Medicare late enrollment penalties. They will have guaranteed access to Medicare Part A and Part B coverage during the regular general enrollment period, but the enrollment delay could increase Medicare Part A premiums by 10 percent.