If you are turning 65 within the next 12 months, it is time to think about Medicare – and your next move. Still working and have insurance through your employer? Or have an individual plan? Either way, you have choices to make before Medicare kicks in. Those decisions could save you money and limit your financial exposure without limiting your coverage.
Before the Affordable Care Act (ACA), people turning 65 had few options because health insurers could make underwriting decisions based on preexisting condition(s). Because of the 12-month preexisting condition waiting period, insurers could deny an application for new coverage or restrict benefits. So soon-to-be-65s probably had to keep their current plan – even if their current coverage was more expensive or the benefits did not match their needs. Many people with either an employer-sponsored plan or C.O.B.R.A. mistakenly believed that this situation did not apply to them. They thought they could change plans because the Certificate of Creditable coverage documented that they had been covered for at least 18 months. Yet health insurers still had the right to decline coverage or limit benefits based on a preexisting condition.
How It Is Now, In a Nutshell…
Keeping it simple: “Preexisting Conditions” are a thing of the past. The ACA allows people under 65 to make health insurance decisions benefitting them – including changing coverage – without worrying about denials or coverage limitations based on pre-existing conditions.
Here are options that could save you money within 12 months of turning 65:
ACA-Compliant Coverage. You can move to an ACA plan when your C.O.B.R.A. policy ends or during ACA annual Open Enrollment, November 1 to December 15. If the ACA option is competitive with your current coverage, the change will have very little effect on your overall benefits. Plus, you may be able save on premiums before you turn 65 and enroll in Medicare and a Medicare Supplement policy.
Affordable Care Act-compliant plans offer similar benefits to employer-sponsored coverage. The ACA guarantees benefits including preventative care, no lifetime or annual benefit limitations, comprehensive coverage, and maximum annual out-of-pocket limitations. Plan deductibles might be the only difference between employer-sponsored and ACA coverage. Employer plans sometimes provide deductibles as low as $250 or $500 which might not be available from ACA plans.
In addition to coverage benefits, the major difference when changing plans will always be financial. An ACA plan will provide similar benefits, yet the monthly premium may not be less than your employer-sponsored plan or your individual plan.
The ACA provision providing a subsidy from the federal government based on household income is an avenue for premium savings. But there is a caveat: With an employer-sponsored plan, you will not qualify for a subsidy unless the cost of your coverage exceeds 9.5% of your household income. If you are 64 years old and have an individual plan, you would qualify for a subsidy only if your income is between 100% and 400% of the Federal Poverty Level (FPL). So, availability of subsidies for most people aged 64 is limited because their household income is too high.
Short-Term Health Insurance. Short-term health insurance is not intended as a substitute for regular long-term health insurance. It bridges insurance gaps for people in transition, with coverage periods ranging from 1-12 months. Some aspects of short-term insurance are most applicable to people turning 65. Here is a recap:
If you are healthy with no preexisting conditions, including significant prescription requirements, short-term health insurance may be an option until Medicare kicks in. This coverage provides significant premium savings but carries a certain amount of risk.
- The Downside. Since short-term insurance is not ACA compliant, it falls under “preexisting conditions” limitations. Short-term insurance only provides benefits for conditions occurring between the start date and end dates of coverage, including prescriptions. If a person taking high blood pressure medication enrolls in a short-term plan and has a heart attack after the start date, they will receive no benefits because their condition is considered preexisting.
And unlike ACA plans, short-term plans are not guaranteed issue, so short-term applications are medically underwritten just like the old days. This means coverage can be denied.
- The Upside. Premium savings can be substantial. For example, if you are age 64 you’d pay $795 per month for a $5,500 deductible ACA Bronze Plan and $655 per month for a $5,000 deductible short-term plan. During the 12 months before turning 65, your total premium savings would be $1,680.
To minimize risk and the potential fee, you can trigger the short-term option at any time leading up to your 65th birthday. For example, you could wait until 90 days before turning 65 to get short-term coverage and save the premium dollars. Then, you would only experience coverage limitations during that 90-day period.
The key to the short-term option is that Medicare and the Medicare Supplement policy are guaranteed issue, when enrolling within six months after your Medicare Part B effective date, with no preexisting condition restrictions, which means that anything happening during your short-term coverage will be covered when you move to Medicare.
STATESIDE CAN HELP!
Stateside Insurance Services, since 2003, has focused on providing comprehensive health insurance information, responsive customer service and expert industry knowledge for Texas consumers. Stateside has annually been recognized by health insurance carriers and the Health Insurance Marketplace as a Top Producer in Texas.
Whether the health insurance policy is for an individual, family, small business or supplemental Medicare coverage, Stateside dedicates the time, and our deep industry expertise, to ensure our clients have identified the best health insurance plan for their specific needs.
Stateside is available to answer any general questions regarding your coverage options, can provide a subsidy determination, and even assist in creating and submitting online applications for ACA compliant plans during an Open Enrollment or throughout Special Enrollment periods.
By using the Telephone Appointment System, clients can take advantage of scheduling a health insurance discussion when convenient for their schedule. During Open Enrollment phone appointment availability is expanded to include extended hours and weekends.