How do the Affordable Care Act and Medicare interact?
Editor’s Note: Journalist Philip Moeller, who writes widely on aging and retirement, is here to provide the answers you need in “Ask Phil.” Send your questions to Phil.
Check out his new Recommended Reading section with links to notable stories and reports at the end of today’s post.
Stuart – Texas: I am unable to work and have been receiving disability since 2006. I am not yet 60 years old. When the Affordable Care Act began in 2014, I enrolled in an individual plan through the marketplace and was granted a subsidy because of my income. When I re-enrolled in 2015, the folks at Healthcare.gov refused to give me the subsidy, because I was technically on the Medicare roll (Part A only because of my disability). Now, in 2016, Social Security has added me to Part B, costing me even more. I now am paying a full individual premium through the marketplace plus the Medicare payment of $158 per month. I am not benefiting whatsoever from the Medicare plan. What options do I have?
Phil Moeller: Readers dying to know about the interactions of Medicare and the Affordable Care Act have struck gold today. Of course, I grant you that this might not be an enormous group, but I shall press on nonetheless. Unfortunately, the facts aren’t so favorable for Stuart. I have been in touch with both Medicare and Social Security about this. I have not shared Stuart’s name, so their responses are necessarily general. But I think the situation is clear, especially where it concerns Medicare.
By design, state health exchanges and Medicare are not supposed to work together. Most people signing up for health insurance on a state exchange qualify for subsidies that are often substantial. Given this federal support, providing such subsidies to Medicare beneficiaries would amount to a double subsidy. While Part A of Medicare, which covers hospital expenses, is fully funded by worker payroll taxes, the other parts of Medicare are not fully covered. In fact, taxpayers foot the bill for about 75 percent of Part B expenses and a hefty share of Part D drug expenses and Medicare Advantage plans as well. While Medicare premiums can be expensive for many older and disabled Americans, they would be unaffordable for most of us if we had to pay the full cost of the programs.
A person on Medicare is not entitled to also receive subsidies when they buy an ACA policy on a state exchange. And a person age 65 or older is not even permitted to buy an ACA policy in most situations. The exception is for older persons who do not qualify for premium-free Part A coverage. To qualify, they need to have worked at least 40 quarters (10 years) at jobs where they paid Social Security payroll taxes. Or they need to be married or have been married to someone who worked that many quarters. If not, they will have to pay steep Part A premiums that can exceed $400 a month. This small group of people may continue to purchase ACA policies.
However, ACA subsidies are not available to Medicare beneficiaries who qualify for premium-free Part A coverage. This includes Stuart. Now, I do not know whether Stuart was covered by Medicare at any period from the time of his disability until he signed up on a state exchange in 2015. But he was still on Medicare. How can this be? Because anyone receiving Social Security benefits must, by law, also receive Part A. And anyone receiving Part A is considered to be a Medicare beneficiary. This fact alone — which I grant may appear unfair in some circumstances — is a disqualifying factor when it comes to ACA subsidies, according to Medicare. Someone having either Part A or Part C of Medicare (Part C is the formal name of Medicare Advantage plans) is deemed by the agency to have what’s called Minimum Essential Coverage, or MEC, and having MEC disallows them from receiving any ACA financial support.
My guess is that while Stuart thinks he is getting a bad deal by losing his subsidy this year, the fact is that he never should have been entitled to a subsidy in 2015. The fact that he was is a not uncommon oversight; its one that Medicare has been working to correct. Here’s a statement to that effect from the agency:
CMS is reaching out to the small number of consumers enrolled in both Medicare and Health Insurance Marketplace coverage with financial assistance. We are doing this to make sure they take action to end their Marketplace coverage with advance payments of the premium tax credit because they are receiving Minimum Essential Coverage (MEC) Medicare, and thus are not eligible for this financial assistance. It’s important that such consumers do this in a timely manner, to help reduce the amount of advance payments of the premium tax credit the tax filer(s) may have to pay back when they file their federal income tax return. We’re committed to helping consumers with Marketplace coverage and will continue to work with them to understand their options.
So Stuart is 0-for-1 so far. In terms of being signed up by Social Security for Part B of Medicare, it seems to me he is correct that this is inappropriate. However, as I’ll explain, it could be that he winds up needing Part B.
A Social Security spokeswoman said she knows of no reason why Stuart would have been enrolled in Part B. Going back to 2006, when he qualified for disability payments, it’s quite possible that Social Security automatically signed him up for Part B when he became eligible for Medicare. This normally takes at least two years after disability payments have begun. And being entitled to Medicare at any age because of a disability is normally a helpful benefit.
However, Stuart did not have to accept Part B, and it appears he did not. He may have had other private health insurance himself or been insured on his spouse’s health policy. I don’t know. But it’s pretty clear he did not have Part B until Social Security enrolled him in it earlier this year.
“Based on the facts presented in this case,” the Social Security spokeswoman said, “I can’t think of any reason Social Security would have automatically enrolled this disability beneficiary into Medicare Part B 10 years after entitlement to disability benefits.”
If Stuart wants to pursue this matter and avoid paying Part B premiums, I’d suggest he call a local office of the State Health Insurance Assistance Program (SHIP) and ask a Medicare counselor to help him. SHIP deals more with Medicare than Social Security, so he may have to contact Social Security directly, which is what the agency suggested.
However, having lost his ACA income subsidy, there’s a good chance that Stuart’s best insurance deal would actually be to drop his ACA policy, purchase Part B and move onto Medicare. He can do this during the Medicare open enrollment period that begins Oct. 15 and extends through Dec. 7, and his new coverage would take effect next January. This decision means some more homework for Stuart to determine the mix of Medicare policies that make the most sense for him and to then shop for the best available policies. Future installments of Ask Phil will be dealing with open enrollment and can help guide Stuart and others in deciding whether what Medicare coverage they should have in 2017.
David – Calif.: Are there Medicare Advantage plans with a “Passport” feature that provide coverage benefits in two different states? I spend about seven months in California and five months in Washington state each year. Can I just enroll in a new Medicare Advantage plan when I move back and forth?
Phil Moeller: Passport is a trade name used by UnitedHealthcare and describes the portability feature offered by some of its Medicare Advantage plans. While UnitedHealthcare does offer the Passport feature on some Washington plans, a spokeswoman says, it is not available in California. So you are out of luck regarding this particular feature. I have not heard if other insurers offer similar Medicare Advantage plans, but perhaps some readers have. If so, please let me know, and I’ll pass the information on to David.
The idea of enrolling in a new Medicare Advantage plan every time you move back to one of these states is possible in theory, but challenging in practice. According to UnitedHealthcare, you would need to change your legal address every time you move, and make sure the new address has been registered with the Social Security Administration. It is the official arbiter of Medicare enrollments. Even if you do this, enrolling in a new plan every five or seven months would play havoc with your plan deductibles, which would need to be reset every time you switch to a new plan.
If a Medicare Advantage plan does not seem feasible given these constraints, you also could use the upcoming Medicare annual open enrollment period to switch to original Medicare (Parts A and B) plus a stand-alone Part D drug plan. You also should explore whether you can get a Medigap plan to close any coverage gaps in original Medicare. If you’re interested in Medigap, you should use Medicare’s Medigap tool to identify the best policies for you available at your current legal address. Then contact the insurers to see if they will sell to you and what their terms would be. Newcomers to Medicare have guaranteed access rights to Medigap policies on favorable terms. But people already on Medicare may not have these right, so you should check first. Open enrollment runs from Oct. 15 through Dec. 7. Good luck!
Older and disabled Americans have a lot at stake in the upcoming Presidential election. Trying to get an impartial assessment of the issues is hard. The Kaiser Family Foundation certainly is biased to the extent it generally supports more health benefits for people. But its arguments are fact-based and very useful. (Source: Kaiser Family Foundation.)
When Larry Kotlikoff, Paul Solman and I wrote our Social Security book last year, we often felt we had walked out onto a very long pier. Readers kept telling us about all the problems and mistakes they were encountering in their efforts to get the Social Security benefits to which they were entitled. But the Social Security Administration kept saying that it was doing a wonderful job, that its websites were winning awards for transparency and effective consumer communications and that its approval ratings were off the charts. Now, according to a recent report from the Government Accountability Office, it turns out that we have a whole lot of company on that pier. The Social Security Administration and its employees are not doing a particularly good job of helping people or of telling them about their benefit choices, the Government Accountability Office found. (Source: Mark Miller for Reuters.)
Rising numbers of older Americans are “aging in place” — staying in their homes well into their later years. People always have preferred to stay in their homes as they age, and advances in “telehealth” and related technologies promise to deliver good and cost-effective care in the home. The trend is also being supported by the rise of age-friendly home design and retrofits, such as safer bathrooms and wheelchair accessible homes and rooms. Now, the push is on for Medicare to ease its restrictions and expand its coverage of in-home care. (Source: John Wasik for The New York Times.)