Are you concerned about losing your health insurance when your spouse becomes eligible for Medicare? Youâre not alone.
I get asked this question all the time. Donât panic, youâll have plenty of options, which I will highlight in this article.
I often refer to the younger spouse as the âtrailing spouse.â When one spouse goes on to Medicare,it can raise the anxiety of the other spouse. In reality, if your health insurance coverage comes through your spouseâs job, you may lose that coverage when he or she retires and enroll in Medicare. Not so long ago, this was a scary and expensive prospect, but things have changed. Now you have several options for health insurance if youâre losing your health insurance because your spouse is transitioning to Medicare.
First, itâs important to understand that if your spouse is enrolling in Medicare but continuing to work past the age of 65, he or she can continue to have employer-sponsored coverage, and you can continue to be covered as a spouse on that plan. Many people who continue to work past age 65 have simultaneous coverage under Medicare and employer-sponsored insurance. And some employers provide retiree health benefits that serve as supplementary coverage for Medicare, even after the employee retires. Retiree health plans may or may not offer coverage to spouses, so youâll want to double-check the terms of your coverage to see what, if any, spousal benefits it will provide after retirement.
But for the remainder of this article, weâll look at a scenario in which one spouse is retiring and the other spouse will no longer have access to employer-sponsored coverage. If youâre not eligible for Medicare yet, where will you find coverage for yourself? Once again, take a deep breathe because you have several options and your medical history doesnât have to be a factor.
â¢Option 1: Your Own Job-Based Health Insurance. Of course, if you have a job that offers you with health insurance benefits but youâve chosen to waive that health insurance (in favor of being covered under your spouseâs plan), youâll be eligible for a special enrollment period at your workplace when you lose access to the insurance plan your spouse had pre-Medicare. This will allow you to enroll in your own job-based health insurance even though itâs not open enrollment for anyone else. Special enrollment periods are time-limited, usually between 30 to 60 days.
â¢Option 2: COBRA. If your spouseâs health plan is subject to the COBRA law, youâll be eligible to continue your current health plan, for a limited time, through COBRA continuation coverage (private sector plans with at least 20 employees have to offer COBRA continuation if they offer group health insurance).
In most cases, COBRA allows you to continue coverage for 18 months. But if your spouse became eligible for Medicare and then left his or her employment (and thus lost access to employer-sponsored coverage) within 18 months of becoming eligible for Medicare, you can continue your spousal coverage with COBRA for up to 36 months from the date your spouse became eligible for COBRA. So, for example, if your spouse became eligible for Medicare five months before retiring, youâd be able to keep your spousal coverage via COBRA for another 31 months after your spouse retires, since that would be 36 months from when your spouse became eligible for Medicare.
If you choose COBRA continuation coverage, know that youâll have to pay the full monthly premiums for your coverage, plus a 2 percent administrative fee. The total premium will likely be larger than the premium that used to come out of your spouseâs paycheck for your health insurance, since your spouseâs employer will no longer be paying part of your health insurance premium each month (some employers donât pay anything towards spousal coverage, but most do pay at least a portion of the total cost). Youâll pay the part youâve always paid as well as the part of your spouseâs employer used to pay.
Not only is COBRA fairly expensive, itâs also temporary. If youâre not going to be eligible for Medicare yourself within 18 months (or up to 36 months, depending on the circumstances), youâll have to come up with another plan for coverage when your COBRA continuation coverage runs out.
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Note that while COBRA is a federal law, many states have laws requiring smaller employers to give employees and their spouses or dependents an option to continue their coverage as well. These state continuation laws vary considerably from one state to another in terms of how long a person can continue their group coverage.
â¢Option 3: Buy health insurance on your stateâs Health Insurance Exchange. Thanks to the Affordable Care Act, you can buy a private individual health insurance policy on your stateâs health insurance exchange. If your health insurance exchange isnât having open enrollment when you lose your spousal coverage, donât worry. Losing coverage under your spouseâs plan will make you eligible for a time-limited special enrollment period in the individual insurance market, on-or-off-exchange (note that in this case, you have 60 days before the loss of coverage, and 60 days after the loss of coverage, during which you can pick a new plan). This special enrollment period is available even if you have access to COBRA continuation of your spouseâs coverage.
If you have a modest income, you may be eligible for a subsidy to help pay your monthly health insurance premiums. And depending on your income, you may also be eligible for subsidized discounts on cost-sharing charges like deductibles, copays, and coinsurance. Youâll apply for the subsidies through the exchange as youâre shopping for health insurance.
â¢Option 4: Buy health insurance privately. Your stateâs health insurance exchange isnât the only place you can buy an individual health insurance policy â individual market health insurance plans purchased outside the exchange are still fully compliant with the ACA, as long as theyâre not considered excepted benefits.
For example, you can buy a policy through a private health insurance exchange like eHealthInsurance.com. You can also buy a health insurance policy directly from a health insurance company. But you won’t be able to get subsidized health insurance unless you get a plan from your state’s health insurance exchange.
So, if there’s any chance that your income will make you eligible for a subsidy, you’ll want to buy coverage in the exchange. (Subsidy eligibility extends up to 400 percent of the poverty level; you can use a chart showing federal poverty guidelines to see how much that is for various family sizes.) The most recent 2022 Federal Poverty Level Chart is viewable at: https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines
You can use an independent insurance agent to advise you and help you buy health insurance. Many, but not all, insurance agents are able to help you buy a plan listed on your stateâs health insurance exchange, or one purchased directly from a health insurance company.
â¢Option 5: Medicaid. If your income is low enough, you may be eligible for government-provided health insurance through Medicaid. In Pennsylvania, the Medicaid program goes by the name of Medical Assistance. You can apply for Medicaid directly with your stateâs Medicaid program. Your stateâs health insurance exchange can also determine if youâre eligible for Medicaid.
If this all sounds a bit overwhelming, youâre not alone. The Pennsylvania Medicare Education and Decision Insight (formerly APPRISE) is Pennsylvaniaâs State Health Insurance Program. Counselors have handled just about every Medicare-related situation you can think of and they are ready to answer your questions about Medicare through your spouse and will recommend the best course of action for you.
(Joel Mekler is a certified senior adviser. Send him your Medicare questions at firstname.lastname@example.org.)