ACA and retiree coverage

[GalaxyBoy]

Sorry if this has been covered here before. I searched and didn't find it.

The government ACA web site at https://www.healthcare.gov/retirees/ states the following regarding early retirees who are covered by insurance from the former employer and choose to drop that plan in favor of a plan from the exchange.

If you have retiree coverage and want to buy a Marketplace plan instead, you can. But:

You can’t get premium tax credits and other savings based on your income. This is true only if you’re actually enrolled in retiree coverage. If you’re eligible for but not enrolled in retiree coverage, you may qualify for premium tax credits and lower out-of-pocket costs based on your household size and income.

This is the case with my DW, who is not yet 65 and is covered by retiree health insurance from her former employer (state government). When I retire hopefully at the first of the year, I could either be added to her plan or I could purchase one on the exchange. If I do that, I would consider purchasing a family plan and dropping her current policy. I'm thinking it'll be much cheaper if I can get a subsidy since I won't have much income in 2017 save for mainly Roth conversions, her very modest pension (barely covers the health insurance premiums) and capital gains distributions.

But what I'm reading is that because she chose to buy insurance from the retirement system, we can't get a subsidy for her? That just doesn't sound right.

 

[MBSC]

As long as your DW is enrolled in the retiree medical plan she is not eligible to receive subsidies if she also has an exchange plan. That is a double coverage situation. If she voluntarily drops the retiree medical plan during the ACA annual Open Enrollment Period (OEP) and selects an exchange plan, then she is eligible for subsidies.

Price should not be the only reason to select a plan. Exchange plans usually have smaller provider networks so make sure they meet your needs.

 

[GalaxyBoy]

Now that makes sense.

Yes, we will consider all factors. Right now, I'm determining what all my options are.

Thanks!

 

[ivinsfan]

As long as your DW is enrolled in the retiree medical plan she is not eligible to receive subsidies if she also has an exchange plan. That is a double coverage situation. If she voluntarily drops the retiree medical plan during the ACA annual Open Enrollment Period (OEP) and selects an exchange plan, then she is eligible for subsidies.

Price should not be the only reason to select a plan. Exchange plans usually have smaller provider networks so make sure they meet your needs.

Are you certain of this? If you have a regular employee plan that doesn't exceed the 10% income threshold(this is household income) you can't just drop it and get a subsidy for your premium. Are you certain the rules are different just because you are retired.

 

[MBSC]

Retiree plans are considered optional.

We have health insurance through my previous employer’s retiree-only plan.
Is there any way that one or both of us can opt out of my retiree-only plan and get subsidized insurance on the exchange?

A. The short answer is yes, you can opt out of your retiree-only plan and shop for subsidized coverage on the health insurance marketplace.

In general, people who have employer-sponsored insurance that meets the definition of “minimum essential coverage” are eligible for exchange subsidies only if the employer plan is considered unaffordable or inadequate under the health law.

However, the law treats people with retiree coverage differently than those in the workforce with job-based insurance.

In other words, if you opt out of your retiree plan to choose a policy on the health marketplace instead, you may qualify for premium tax credits that are available to people with incomes between 100 and 400 percent of the federal poverty level.

Keep in mind, however, that even though the premiums may be more affordable on the exchange, it’s important to carefully compare the benefits in your retiree plan with those in the exchange plans to make sure a new policy provides the coverage you need.

Reference: A Reader Asks: Can I Opt Out Of My Retiree Plan To Get Subsidized Insurance? | Kaiser Health News

 

[Sue J]

In our case, and I suspect it may work this way for you too, if DH stayed with his retiree plan and I went through the exchanges our subsidy (for just me) was less than half of the subsidy if both of us went through the exchange.

In other words, the subsidy was based on our total household income and only one of us needing insurance compared with the same total household income and both of us needing insurance through the exchange. You still have to use your total income even though only one of you is buying insurance.

Anyway, it worked out better for us if DH opted out of his retiree insurance and we both bought through the exchange. For us to both stay on his retiree insurance would have been more than 20% of our income.

 

[GTFan]

My retiree plan has no employer subsidy so it's a no-brainer to go with the exchange + subsidies for me (retirees pay full cost in other words). Saves me something like $800 a month, and the network is no worse than what I could get with the employer plan. Cost-shared Silver plans are better than the employer plan too (lower deductible and max OOP).

As mentioned retiree coverage is optional and as long as you don't use it you're a full participant on the exchange with subsidies, cost-sharing etc.