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What Happens to Affordable Care Act Coverage Once You Become Eligible for Medicare

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The transition from the Affordable Care Act (ACA) to Medicare is a significant milestone for many Americans. As you approach the age of eligibility for Medicare, it's essential to understand how this change will affect your coverage under the ACA including any subsidies you receive to help offset the cost of the coverage. Here, we'll explore the details and provide clarity on what happens to your ACA subsidies once you qualify for Medicare.

Understanding the Affordable Care Act (ACA) Subsidies

The ACA, also known as Obamacare, provides subsidies to help eligible individuals and families afford health insurance coverage through the Health Insurance Marketplace. These subsidies, known as Premium Tax Credits, are based on your income and the cost of insurance in your area. They are designed to lower the monthly premiums of those who might otherwise struggle to afford health insurance.

Eligibility for ACA Subsidies

To qualify for ACA subsidies, you must meet specific criteria, including:

  • Having an income between 100% and 400% of the federal poverty level (FPL)
  • Not being eligible for other qualifying coverage, such as Medicaid, Medicare, or employer-sponsored insurance

Transitioning to Medicare

Medicare is a federal health insurance program primarily for individuals aged 65 and older, but also for certain younger people with disabilities or specific medical conditions. Once you become eligible for Medicare, your health insurance options change significantly.

Impact on ACA Subsidies

When you become eligible for Medicare, you are no longer eligible for ACA subsidies. This is because Medicare is considered qualifying health coverage, and the ACA subsidies are intended for those without access to such coverage. Here’s how the process typically works:

Automatic Enrollment

If you are already receiving Social Security benefits, you will be automatically enrolled in Medicare Parts A and B when you turn 65. Your ACA subsidies will end as your Medicare coverage begins.

Manual Enrollment

If you are not receiving Social Security benefits, you will need to sign up for Medicare manually. It’s crucial to do this within the enrollment period to avoid any gaps in coverage or potential penalties. Once you enroll in Medicare, your ACA subsidies will cease.

Steps to Take

Notify the your current plan

The month before Medicare begins, you should notify the Health Insurance Marketplace and your current plan that you will be disenrolling from their coverage. If you have a spouse or dependents on your ACA plan, make sure you don’t drop their coverage.

Review Your Medicare Options

Medicare offers various parts and plans, including Part A (Hospital Insurance), Part B (Medical Insurance), Part C (Medicare Advantage), and Part D (Prescription Drug Coverage). Our brokers can help you decide on the plan that meets your needs.

Some people receive a “sticker shock” when their Medicare begins because their ACA plan is very low cost due to this subsidies they receive.  Medicare currently costs $185 per month.

Conclusion

Transitioning from ACA subsidies to Medicare is an important step in managing your healthcare coverage as you age. By understanding the impact on ACA coverage and taking the necessary steps to enroll in Medicare, you can ensure continuous and comprehensive health coverage. We at New Jersey Medicare Brokers can help you with the transition to Medicare.

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