Update March 18 – We just provided an update on how the new TrumpCare replacement will affect people age 50 – 64 – “Obamacare Replacement Will Hammer Pre-Retirees“
March 1, 2017 — Judging by the number of Comments and questions we are seeing on this Blog, baby boomers are uneasy about what might happen to their healthcare insurance under Medicare, Medicaid, or the Affordable Care Act (ACA – Obamacare). Given all the headlines and conflicting plans and positions, those concerns seem to be well founded. In this article we will air some of the most frequent questions and concerns aired on the Topretirements.com Blog. In some cases we provide answers provided by other Members. We also have some good resources to recommend where you can research this topic in greater detail.
First, a little update on where we stand
The President, the Republican controlled Congress, and the new Secretary of the Health, Education and Welfare have all said they are going to repeal and replace the Affordable Care Act (ACA – Obamacare). Democrats, on the other hand, favor improvement/repair rather than repeal. The subject is confusing: according to one poll, one-third of Americans don’t realize that the ACA and Obamacare are the same thing. Republicans have floated at least one replacement plan in rough form, but they appear to have no consensus among themselves, in fact conservative Republicans say they won’t go along with many of the provisions in that plan. What will happen, and how long it will take for the changes to take place, is anyone’s guess. The President, who has promised to replace it with “something terrific”, seemed to acknowledge the difficulties this week when he met with governors and health executives, after which he commented that “Nobody knew health care could be so complicated”. To the President’s credit (in our view), his new budget plan reportedly has no cuts to Medicare or Social Security. It will be interesting to see how this plays out.
Changes to all 3 health insurance programs promised
Proposed changes to health insurance will probably affect all 3 major federal programs: The ACA, Medicaid, and Medicare. The ACA extended coverage to roughly 20 million Americans. About half of the newly covered got insurance coverage from the new exchanges created by the ACA (many of whom got tax credits based on on their incomes up to 400% of the Federal Poverty Level – FPL). The other half got it from Medicaid expansion in the states that agreed to do that (most of whom have incomes under 138% of the FPL).
Insurance under the health exchanges and Medicaid programs were tied together in many ways by the ACA. Repeal of the ACA would, depending on what it might be replaced with, almost certainly change many aspects of both programs, and reduce the number of people insured.
The third federal program, Medicare, which provides medical insurance to most people over 65, is separate from the ACA. But that does not mean it is immune to change – Speaker Paul Ryan and other Republicans have proposed replacing it with fixed amounts per recipient. Critics are concerned that a voucher program could mean coverage limits.
Now for those questions (We hope you’ll add yours in the Comments section!)
In many cases here we have provided answers provided by our Members in the Comments section. There are many more interesting questions and responses in the Comments sections to our other Medicare and Obamacare articles (see Further Reading at end of article).
1. Can someone who is Medicare age eligible apply for coverage even though that person is eligible for health insurance coverage through their employer? (Staci)
(This is BeckyN’s answer)
Staci, you might want to check with your employer’s benefits department on your employer-provided plan. Some plans may require you to sign up for at least the “premium–free” Medicare Part A at 65 (providing you qualify for it).
The employer plan may state Medicare Part A then becomes your primary, with employer-provided insurance covering what Part A does not cover as secondary insurance plan. Also this provision will probably be completely separate and different from what they require for Part B of Medicare (which requires a premium paid by you).
But if you’re still working and your employer coverage is a high-deductible plan with a health savings account (HSA), be careful. Under IRS rules, you cannot contribute to an HSA in any month that you are enrolled in Medicare (A or B).
So, when making a decision on whether to sign up for either Medicare Part A (or B) at 65 there are multiple factors to consider: 1) whether you qualify for Medicare A with or without a premium, 2) whether you have a HSA with your employer, 3) what are the stipulations in your employer’s plan when you turn 65 and 4) the Medicare rules on signing up for Part A during your initial enrollment period.
It is probably best to get information from your employer directly. Always lots to think about-never simple.——
(Kate’s response to BeckyN) – Very good advice! I checked and my employer’s plan is one that requires me to apply for Medicare at 65. At that point Medicare is primary and my employer’s health care is secondary—
See also: Is it worth keeping Medicare if I’m covered by my new employer? , a recent article on the PBS News site. (Thanks to JoannL for this excellent link).
2. If the government pays for your Medicare and prescriptions because your income is $15,000 are you allowed to have savings? My friend will be very low income but she came into a small inheritance. I would think that would be considered to make her ineligible for assistance.
by Louise —
Answer: This question is referring to Medicare’s program of extra help with prescription drug payments for lower income individuals. To be eligible you cannot own more than $13,820 for an individual or $27,600 for a married in stocks, cash, etc. But your primary home, vehicles, life insurance, etc. do not count against that total.
See this Social Security Publication
3. Medigap Insurance. Can anyone from SE Florida tell me what it cost for Medicare part F and D plan along with a good donut hole coverage plan? Trying to figure out a retirement budget regarding these expenses. We plan on moving to Delray in late 2017 from Texas. (Skip from Texas)
Answer. Medigap insurance generates a tremendous amount of questions and confusion, mainly because there are so many alternatives. Medigap basically covers whatever your Medicare Parts A, B, or (if you have it) Medicare Advantage plans won’t cover. Florence’s suggestion to Skip was: “You need to investigate on line. The cost in each state is different. See Medicare- What is Medigap
3. There is much confusion between Medicare, Medicaid, and the Affordable Care Act health exchanges.
Medicare coverage has nothing to do with ACA. Obamacare and the Affordable Care Act Act are the same thing.
Medicare Part A is hospital coverage 65 and older and covered by the Fed govt. Part B is office visits, labs, etc., and your premium is dependent on what your income is. Medicare pays 80% the rest is up to you. Therefore many people buy a supplemental plan from an insurance company (medigap) – the plans are alphabetized. Each state’s premium for a particular plan is different depending upon the plan you choose. You also pay for a Part D plan (drugs) through the same insurance company. All of this is traditional Medicare, it has nothing to do with Medicare Advantage Plans nor the ACA. (B. Pentony)
4. Where do we go from here?
In a Comment on Topretirements.com Brian summed up the problem that baby boomers face, now that we have had the election and the new Administration is in place: “So, really isn’t it essentially impossible to provide any concrete advice for 2018 and beyond that can be relied upon until after we learn what changes are going to be made to healthcare coverage for those who retire before 65 and even for many already using Medicare?” Brian, we are afraid you are correct.
That being said, there are some steps you can take:
– If you are working and have health insurance, don’t quit or retire! The phenomenon is called “job lock”, and the NY Times has an interesting article on it: “If Obamacare Exits, So Could Your Chances of Retiring Early“.
– If you do not have health insurance and are under age 65, do your best to get coverage so you don’t have a gap in coverage. Open enrollment for Obamacare ended Jan. 31, 2017 for this year. But you can still apply any time: 1) If you qualify for a Special Enrollment Period due to a life event like losing other coverage, getting married, or having a baby. Or 2), If you qualify for Medicaid or the Children’s Health Insurance Program (CHIP).
– Be informed about what proposals are coming from the government, and let your representatives know how you might be affected by it.
Comments? What are you doing to protect your health care insurance? What questions do you have about Medicare or other health coverage? Please share your thoughts in the Comments section below.
For further reading
So You Are Turning 65 – Your Medicare Guide 101 95 Comments
How to Solve the Health Care Puzzle If you Are Not Yet 65 94 comments (Note: If Obamacare is repealed much of this article becomes outdated)
AARP Raises Concerns About Future of Medicare 79 Comments