For Covered California consumers who are eligible for Medicare, the health insurance subsidies may be discontinued. You don’t have to be enrolled in Medicare, the condition for discontinuing the subsidies is that you are eligible for Part A.
Medicare Nixes Covered California Subsidies
For many Covered California consumers, their health plan with the subsidies is less expensive than Original Medicare. However, if you are eligible for Original Medicare Part A, you are ineligible for the Covered California Affordable Care Act Premium Tax Credit subsidies to reduce the health insurance premiums.
The rules for the Affordable Care Act Premium Tax Credit (PTC) health insurance subsidies are outlined in IRS publication 974. Specifically, it states that if an individual is eligible for MEC (minimum essential coverage) they are ineligible for the health insurance subsidies.
Government-sponsored programs such as Medicaid (Medi-Cal) and Medicare Part A (hospital insurance) are considered minimum essential coverage. You don’t have to be enrolled in Part A, you only need to be eligible for Part A to be ineligible for the Covered California subsidies.
Covered California Alerts 64-Year-Old Consumers
Covered California alerts individuals who are approaching their 65th birthday that they may be eligible for Medicare. Additionally, they inform the consumer that if they are eligible for Medicare, they cannot get financial help or the subsidies from Covered California for health insurance. Medicare is effective the first day of the month the individual turns age 65 and has the necessary work credits. However, if your birthday is the first day of the month, Medicare is effective the prior month. In other words, you may be eligible for Medicare sooner than you think.
Covered California must perform periodic data matching between their enrolled members and federal databases. If they determine that a consumer is eligible for Medicare, and the individual is receiving subsidies for health insurance, they will be automatically discontinued.
For B, a Covered California consumer, they are receiving $969.92 federal subsidy and $28.00 state subsidy to reduce their health insurance premiums. B is 64 year old and is paying $107.58 per month for their Blue Shield Silver 87 health plan. B is comparing the cost of Medicare to Covered California.
Their Part A premium is $0 because they paid Medicare taxes for forty quarters. The Part B premium for 2026 is $202.90. If B enrolls in a Plan G Medicare Supplement, the approximate monthly premiums will be $150. Alternatively, they could enroll in a Medicare Advantage plan with drug coverage for $0 a month. The monthly cost range for B’s Medicare coverage will be between $202.90 and $400 per month.
Of course, if B does not enroll in Medicare, Covered California will ultimately discontinue the subsidies, and they will have to pay the full premium amount of $1,105.50 per month. If B waits too long to enroll in Medicare, approximately three months after the birthday month, they may not be able to enroll in Medicare. They will be stuck paying the full premium amount for the health insurance until the beginning of the new year when they can apply for Medicare parts A and B.
If B has a spouse or dependent who is under 65, B can leave the health plan while the spouse or dependent remains in Covered California with the subsidies. B will still be in the household of Covered California, just not enrolled in a health plan. It is important for B to remain in the household because the subsidies for the other household members are based on the tax household size.
If You Are Not Eligible For Medicare
Not everyone is eligible for Medicare. I have several clients who lived and worked in a foreign country and never paid Medicare taxes. Some people, born in the U.S., never paid Medicare taxes and were never married to someone who qualified for Medicare. (Spouses of individuals who are Medicare eligible can use the current or former spouses Medicare eligibility to gain Medicare health insurance.)
Covered California offers the Attestation of Medicare Eligibility and Enrollment form for individuals who are not Medicare eligible. Once this form is filled out and submitted, Covered California can continue paying the health insurance subsidies to lower health insurance premiums.
YouTube video on Medicare and Covered California subsidies.
