Medicare and Health Insurance Exchanges

Health Insurance Marketplace Information for Medicare Members

As the introduction of the health insurance marketplace coincided with Medicare open enrollment in fall 2013, the federal government anticipated Medicare members might be confused over the purpose of the exchanges under the Affordable Care Act. In an announcement prior to the open enrollment start date for the marketplace on Oct. 1, 2013, White House officials warned Medicare beneficiaries that scam artists may target them, trying to sell them impostor health plans and steal their identity. As the marketplaces opened, their prediction wasn’t off the mark, as interesting sales tactics were used by groups alleging to sell “Obamacare coverage” that told seniors they could buy it. Aside from the evolving world of insurance fraud and scams targeting the elderly, if you have Medicare, you’re not eligible for coverage on the exchange — you’re already insured.


What is the Marketplace?

The marketplace was created by the health law to insure individuals and small businesses who can’t get comprehensive coverage from an employer, Medicaid, Medicare, or any other government program. This coverage is primarily for Americans under age 65 with low-to-moderate income who can reduce the cost of coverage by applying for federal subsidies. Also called the health insurance exchange, it serves as an outlet for insurers to sell affordable plans to consumers in every state. Subsidies range in size and help bridge the gap between Medicaid, the government medical assistance program, and the individual market, so that more people can obtain health insurance. Under federal law, everyone who can afford coverage is required to buy a health plan, and these plans help people meet that requirement. Exchanges vary by state, as some manage their own exchanges, and marketplaces in other states are run by the federal government.


Marketplace Vs. Medicare

The state health insurance exchanges sell insurance on the individual and small group insurance markets, not the Medicare market, which is an entirely separate sector. The individual market insures applicants up to age 64, because at age 65 every policyholder is eligible for Medicare. Medicare-related products, such as Medicare Supplement (Medigap) plans, are also unavailable through the marketplace. Therefore, it is illegal for anyone to sell you coverage through the marketplace if they are aware you have a Medicare plan. If you want additional coverage for benefits that aren’t included in your Part A, Part B, or prescription drug insurance, contact a licensed agent to find out more about Medicare Supplement coverage options at 888 803 5917.

However, in atypical cases, if you are eligible for Medicare and have not enrolled either because of premium costs or because you are not a Supplemental Security Income (SSI) beneficiary, you may enroll in a plan on the exchange. One of the key purposes of the ACA is to promote equality across all insurance markets, making sure everyone who needs insurance can get it, regardless of age or income.

Prior to choosing the marketplace over Medicare, if you have this option, you should consider the following:

  • If you enroll in Medicare after your initial enrollment period is over, you may have to pay a penalty fee for enrolling late for the duration of your Medicare benefits.
  • You can usually enroll in Medicare only during the Medicare general enrollment period, lasting from January 1 through March 31. Your insurance benefits won’t take effect until July of that year.

While you can enroll in the marketplace and be eligible for Medicare, it’s more expensive to get insured through the exchange if you qualify for Medicare. Subsidies are only available for those who don’t have access to any other type of coverage, unless an applicant’s employer pays less than 60 percent of their total costs. In other words, Medicare-eligible marketplace enrollees pay the full premium for an individual plan on the exchange, which may be more than a Medicare premium. Additionally, if you have a low income and enroll in Medicare, you may qualify for dual eligibility in Medicare and Medicaid, which would then pay your premium in full and potentially assist with other costs.


Enrolling in the Marketplace Before Medicare

For those just on the cusp of Medicare eligibility, the marketplace can be a great solution for comprehensive, reasonably priced coverage in many cases. Short-term plans are also a good choice for these periods. If you become eligible for Medicare after you have enrolled in marketplace coverage or any other health plan, you can simply cancel your other health plan before your Medicare benefits are effective. Around the time you turn 65 years old and become eligible for Medicare, you will have an initial sign up period beginning three months before your birth date and ending three months after your birth date.

Be warned that if you enroll in Medicare after you first become eligible and your initial enrollment period ends, you may be required to pay a penalty fee for late enrollment, as mentioned.


Does the Marketplace Change Medicare?

The marketplace and Medicare are unrelated, and no changes have been made to the Medicare program with the introduction of the health insurance exchange for individuals and small businesses. Your Medicare choices are unaffected by the exchange, and you will still have the same options and coverage through the Medicare program. If the Medicare program announces any adjustments to members’ plans, then it might impact your current coverage.