Individuals who recently acquired Parts A and Part B of Original Medicare may find they have to pay more per month than their existing ACA health plans. Under the ACA rules, once someone accepts Medicare, they must exit any ACA health plan they purchased through the exchange and the tax credits that make it affordable. Unfortunately, similar cost reductions with Medicare may not be available.
Medicare costs more than ACA plans
I recently met with a client who is under 65 and had just been awarded Medicare Parts A and B because of a disability. Upon comparing her Enhanced Silver ACA health plan with its reduced cost sharing benefits and low premium from the Advanced Premium Tax Credit to Original Medicare we found that her monthly premiums would increase between $25 and $50 per month. In addition, the cost of her office visits would triple AFTER she met her Part B deductible of $147.
From the Medicare and You 2014 Handbook
Can I get a Marketplace plan in addition to Medicare?
No. It’s against the law for someone who knows that you have Medicare to sell you a Marketplace plan. This is true even if you have only Medicare Part A or only Part B.
What if I become eligible for Medicare after I join a Marketplace plan?
You can get a Marketplace plan to cover you before your Medicare begins. You can then cancel the Marketplace plan once your Medicare coverage starts.
Medicare increases cost sharing
My client’s anxiety level was heightened further when she learned the Part A hospital deductible was $1,216.00 under Medicare and there was no annual out-of-pocket maximum cap under Medicare. With her current ACA health plan she is limited to having to spend $2250.00 per year. After she reaches that maximum out-of-pocket amount, the health plan picks up the rest of the covered expenses. Medicare has no such provision and the hospital deductible can be incurred several times during the year. Medicare costs at a glance.
ACA rules force switch to Medicare
Because the ACA has the rule that an individual can’t have an ACA plan when they are eligible for a government health plan that meets the minimum essential requirements such as Medicare or Medicaid, she feels like she is being pushed into a health plan with higher costs. But it doesn’t matter if the individual gains Medicare because of a disability or ages into the system, any low-income person turning 65 and transitioning into Medicare will experience the same increases in monthly and annual health care costs.
No cap on Medicare out-of-pocket expenses
The spreadsheet below shows the costs for a 50 year old individual with a modified adjusted gross income of $17,000 per year. Under the ACA program this individual would be eligible for the Enhanced Silver 94 plan with reduced medical and pharmacy deductibles, cost sharing reductions for health care services along with a reduced annual maximum out-of-pocket amount. The individual’s current Anthem Blue Cross Silver 94 plan in Sacramento County is compared to the costs for Original Medicare where they must purchase a Part D Prescription Drug Plan (PDP), Original Medicare coupled with a PDP and a Medicare Supplement and, finally, Original Medicare where the individual selects a Medicare Advantage Plan that includes the prescription drug coverage (MA-PD).
| ACA | Medicare1 | Med Sup | MA-PD | |
| Monthly Premiums | Blue Cross | Part B2 & D3 | Plan F4 | Blue Shield |
| Medical Premium | $53.00 | $104.90 | $104.90 | $104.90 |
| PDP Premium | included | $26.00 | $26.00 | $0.00 |
| Plan F Premium | — | — | $250.00 | N/A |
| Blue Shield HMO 65 Premium | — | — | — | $0.00 |
| Total Monthly Costs | $53.00 | $130.90 | $380.90 | $104.90 |
| Cost Sharing | ||||
| Hospital Deductible | $0 | $1,216 | $0 | $1,000 |
| Medical Deductible | $0 | $147 | $0 | $0 |
| Office visit copay | $3 | 20% | $0 | $8 |
| Emergency Room | $25 | 20% | $0 | $65 |
| Urgent Care | $6 | 20% | $0 | $15 |
| Maximum Out-of-Pocket | $2,250 | No Cap | $0 | $3,400 |
1. Part A is premium free with 40 quarters of employment.
2. Part B premium must always be paid regardless of whether the beneficiary has a Medicare Supplement plan or enrolls in a MA-PD.
3. PDP plans can range from as low as $15. Lower premium PDP plans include a $320 deductible that must be met before fixed prescription copayments start.
4. Plan F premium for 65 year old is approximately $140 in Sacramento County.
Enhanced Silver plans are gold
No matter which way you slice it, the Enhanced Silver 94 Plan is a great deal for low-income individuals. It is better than Original Medicare, especially if the member takes any brand name prescription medications. While the Medicare Advantage Plans can be an attractive alternative to an ACA health plan, they are generally HMOs, may not always be $0 premium and may be cancelled the following year. The overall best option, and the most expensive, is Original Medicare with a guarantee issue Supplement Plan F. But purchasing a Medicare Supplement Plan F is out of reach for most low-income beneficiaries.
Medicare Extra Help
There is “Extra Help” to pay for prescription drug medication in the form of a low-income subsidy for Medicare beneficiaries. This extra prescription drug help is available to individuals with incomes less than $17,235 per year and less than $13,300 in other resources such as savings accounts. There is also help paying for the Medicare Part B premium under the Medicare Savings programs. In general, to qualify an individual must have a monthly income of less than $1,313 and resources of less than $7,080 (2013 figures). There may also be additional help from the state Medicaid program.
Can the ACA be fixed?
If a person who becomes eligible for Medicare either through disability or age, depending on their assets and income, the forced transition to Original Medicare could be a real burden because of the costs associated with the program. This is one of those unfortunate collisions of rules and regulations between separate government programs where there will be people who are adversely affected. The simple fix would be to allow those who qualify for Medicare, but are happy with their ACA individual plans, to keep them at least until the next open enrollment period.