What happens when I switch from an exchange plan to Medicare?
Many people will be enrolled in Medicare automatically when they turn 65, including all Medicare-eligible citizens who were receiving Social Security benefits prior to that point. You may also enroll manually around this time if you are not an automatic enrollee. Once you have enrolled in Medicare, you have two main options regarding any coverage you may be getting through the health insurance exchange/marketplace.
First, you can choose to drop your exchange plan and switch to Medicare exclusively. If you choose to do this, be sure to contact your plan/insurer and ask them to cancel the coverage you purchased through the exchange, since this will not be done automatically when you enroll in Medicare. You should be careful to time the dropping of your exchange plan so that you will not experience any gaps in coverage. Note that the time at which you enroll in Medicare will impact when your Medicare coverage begins. For example, if you enrolled in the three months leading up to your 65th birthday, your coverage will begin on the 1st of your birth month. If you apply during your birth month, your coverage will begin one month later. If you apply one month after you turn 65, it will begin two months later, and if you apply two or three months after you turn 65, it will begin three months after you apply. Outside of this timeframe (known as one’s Initial Enrollment Period), you can also apply during the General Enrollment Period for Medicare, which runs from January 1st through March 31st, though coverage obtained during this time will not begin until July 1st of that year.
Your second option is to enroll in Medicare but still hang on to your old plan from the exchange. Medicare would be your primary payer in this situation. This is a perfectly valid choice, but there are two things that you should be aware of before you do this. First, insurers on the exchange are not allowed to sell coverage to Medicare enrollees that duplicates what that enrollee receives under Medicare. In other words, while you will be able to renew your current exchange plan for future years, you will not be able to purchase a new one.
Enrolling in Medicare also makes one ineligible to receive premium tax credits (also called premium subsidies) and other forms of financial assistance from the exchange. Thus, if you do choose to keep your old coverage in addition to getting Medicare, you will need to pay full price for it. If you had been receiving subsidies prior to enrolling in Medicare, you should get a letter in the mail around the time you enroll notifying you that you are no longer eligible for financial assistance from the exchange. If you do choose to keep your exchange plan past this point, be sure to contact them after receiving this letter and make sure that they are aware of the situation and that subsidies are no longer being applied to your plan’s premiums. Any “subsidies” which are applied in the months after you become ineligible will need to be repaid later.
Can I use a premium tax credit to help pay for my Medicare coverage?