Do I Need To Keep My Obamacare Plan If I’m Starting Medicare Next Year?
Q: I turn 65 in May, but haven’t started Medicare yet. I plan to continue working until 66 — my full retirement age. I currently get my health coverage through an Obamacare plan. Will I be required to keep that plan for the first three months of 2016 since Medicare will be starting? I’m in good health and thinking about dropping my current Obamacare plan at the end of this year since the deductibles and cost sharing are so high that I’ve been unable to use this plan.
There are several reasons to maintain your Obamacare coverage in the months before you start Medicare next year. In addition to avoiding the financial risk of being uninsured, and tax fees for not having health insurance, continuous coverage is important under Medicare’s “guarantee issue” rules.
Unlike Obamacare plans that are required to provide coverage despite pre-existing conditions, Medicare supplements known as Medigap policies can still impose a 6-month waiting period or even exclude coverage if you have not maintained “creditable coverage” like your Obamacare plan. Medigap policies pay most of Medicare’s out-of-pocket cost sharing and may be a choice you will want to consider.
Medicare Advantage plans on the other hand are a way you receive all of your core Medicare benefits and do not impose waiting periods or exclusions for pre-existing conditions. You can shop for and switch those plans every year during the fall Open Enrollment period. The premiums of these plans tend to be lower than Medigap plans but the out-of-pocket costs can be higher.
Since you are still working, and will not be receiving Social Security, you won’t get Medicare automatically. You will need to apply for it and you’ll need to do so during your 7 - month Medicare Initial Enrollment period to make sure you receive your “guarantee issue rights” if you are planning on purchasing a Medigap plan. For birthdays in May, your initial enrollment period starts in February and ends in August of 2016.
To get your Medicare Part A and Part B coverage started by your birthday, don’t procrastinate. Sign up early in February. You can do this online at SocialSecurity.gov, which is preferable to fighting long lines and waits at your local Social Security office. Processing your application and receiving your Medicare card may take up to a month to six weeks. Once you have signed up for Medicare you then need to choose how to receive your benefits — whether getting them through Original Medicare, plus a Medigap and Part D plan, or enrolling in a Medicare Advantage plan.
Once your Medigap or Medicare Advantage plan coverage becomes effective, you will still need to contact your Obamacare plan to terminate that coverage. You don’t want to continue getting those premium bills!
It sounds as though you should get help NOW during the Healthcare Marketplace (Obamacare) Fall Open Enrollment period going on through January 31, 2016. Doing so can help you compare the health plans for adults younger than 65; learn if you have better options than the plan you are in now, and if you qualify for additional subsidies that would lower your out-of-pocket costs. Those subsidies are available for “silver level” plans.
You can find free, unbiased help from specially trained “healthcare navigators” in your community. For free help choosing Medicare health plans and drug coverage from state health insurance assistance program (SHIP) counselors, contact your local senior services department or area agency on aging.