Marketplace or Medicare: Should You Go or Should You Stay?

Welcome to the season.

Yes I’m talking about open enrollment, but also the season where your Marketplace clients — or Affordable Care Act public exchange plan clients — are asking questions.

If you have a male turning 65, more often than not, his wife is going to be, what, maybe 63, 62.

We know he’s going to reposition his health care funds from the stand-alone health plan.

He and his wife have to pay for some kind of supplemental coverage — Medicare supplement or Medicare Advantage — for him, because he’ll be enrolling into Medicare.

And when he does that, his wife will now need her own stand-alone health plan, so your “season” as an agent or advisor is to answer the questions that are top of mind for your clients and prospects during the buying season.

We know this season, for ACA coverage, Medicare plans and Medicare Part D prescription drug plans, can be confusing for them and maybe, sometimes, even for you.

There are so many parts of each of these it would take a short novel to unpack the myths and truths of each.

In this article we’ll just tackle some of the basics, so, if you are asked any of these questions, you’ll have the answer.

Questions and Answers

Question: What if your client has a Marketplace health plan and is coming up to age 65?

Should the client enroll in Medicare or keep the Marketplace plan?

Or, can the client do both?

Answer: If the client’s turning 65, the client should sign up for Medicare. If the client has worked 40 quarters or more, there is no cost to the client for having Medicare Part A inpatient hospitalization coverage.

There is a premium for Medicare Part B physician and outpatient services coverage, and each has a deductible. Part B coverage has co-pays.

However, these cost are usually much lower than an ordinary major medical insurance premium.

Part A and Part B pay only 80% of the patient’s costs. The patient faces a 20% coinsurance payment requirement. Many people get extra coverage to pay the 20% of the bill that Medicare Part A and Medicare Part B don’t cover. Some clients will get Medicare supplement insurance. Others will get a Medicare Advantage plan.

One thing to keep in mind is that once your client’s Medicare Part A coverage starts, the client will no longer be eligible for any premium tax credits or other cost savings the client may have been getting for the Marketplace plan.

Question: When does the client enroll in Medicare, and when does the client either keep or cancel the Marketplace plan?

Answer: Let’s say the client is turning 65 in Dec 2022. The client will be in the initial enrollment period for signing up for Medicare.

The initial enrollment period is the period of time your client can get Medicare without regard (in most cases) to your client’s health condition. That period starts three months before your client’s 65th birthday and ends three months after your client’s 65th birthday.

The reason your clients should consider enrolling in Medicare when they are eligible is:

1. Once their Medicare Part A coverage starts, they are no longer eligible for a premium tax credit or other savings for a Marketplace plan. To keep their Marketplace plan, they’d have to pay full price.

2. Should they enroll in Medicare after their initial enrollment period ends, they may have to pay a Part B late-enrollment penalty for as long as they have Medicare.

3. If they miss the original initial enrollment period window, they can enroll in Medicare Part B (and Part A if they have to pay a premium for it) only during the Medicare general enrollment period, which lasts from Jan. 1 to March 31 each year. Your client’s coverage won’t start until July of that year. This may create a gap in their coverage.

Maybe your clients see Medicare as a better deal, so they want to cancel their Marketplace coverage. How do they do this, and is there any penalty for doing so? Do they have to do it a certain way?

Clients shouldn’t end their Marketplace coverage until they know for sure when their new coverage starts.

Why?