Turning 65 in 2023 - Medicare question...

[mikes425]

Hi, I'm basically semi-retired, a self-employed freelance sole proprietor - turning 65 in April 2023. I've been on an ACA Marketplace (HMO) self-paid plan with the subsidy this year, bringing the premium down by about 400/month from what it would 've been, but income fluctuates and as i understand it i might be required to pay some of that back if i wind up having earned more than I estimated i would this year...

I see stuff about open enrollment for ACA with a deadline looming of a few days from now 12/15. What am i supposed to do as far as health coverage? I am totally new to this. If i'm ok with the plan i'm on now, should i just contact them and extend this plan for 2023 and then cancel it when I am eligible to buy into Medicare or... is there some smart 'strategy' i should be looking at .. more cost-efficient route? - shouldi consider some short-term plan for major medical that would just cover me through April and then, cancel that and sign up for Medicare?

Thanks for any suggestions!

PS: I'm in good health, no dependents, no debt. I have a 'concierge' primary doctor and a few specialists. No major med expenses. My dr has said he'll only charge me 25/visit if i had no insurance at all, FWIW.

 

[aaronc879]

I have been on the ACA for 8 of the last 10 years and I have signed up for a new plan during open enrollment every year. I would suggest that you quickly estimate your 2023 income and then sign up for a ACA plan. Cancel it as soon as you are covered by Medicare

 

[Aerides]

You just do the same thing this year as you did last year to get on the ACA. You go to the healthcare marketplace, pick a plan, and sign up. I do it every year, almost the same way I used to have to do it via my employer plan each year. Even when you stay on the same plan, you still re-up.

Then, when your medicare eligibility window opens, you contact Medicare, get signed up, and cancel the ACA plan. This is usually 15 or 30 days before your bday, but there are plenty of threads on when to sign up for medicare.

I would not mess around with any cheaper short term options as they often lack comprehensive coverage, and have caps. Not a good time to get hit by a bus.

 

[sengsational]

There are some existing discussions on this board about canceling ACA when going on Medicare. I think the bottom line was to call the last day of the month before your birthday month. Doing it online might also work, but there were reports of getting charged for an overlapping month (your birthday month).

 

[mikes425]

Thanks, so i'll likely be well below my 2022 income as far as freelance work, tho investment income/dividends are estimated for somewhere in the realm of 60-65k for 2023. I assume that factors into the total income at 100% for the ACA
calculation?

Part of me says, if i'm looking at coverage just for a few months til April, the plan i'm on now is working ok and out of simplicity it'd probably be easiest to just stay on this one...in which case i assume i would just call them directly to 're-sign' for it. However, i gather it might be more cost-smart to look for a lower-premium option (with subsidy) on the ACA marketplace if I suspect i will probably have less work income in 2023 than 2022...and also there's the fact that i'll cancel and go to Medicare in April....

I have been on the ACA for 8 of the last 10 years and I have signed up for a new plan during open enrollment every year. I would suggest that you quickly estimate your 2023 income and then sign up for a ACA plan. Cancel it as soon as you are covered by Medicare

 

[aaronc879]

Thanks, so i'll likely be well below my 2022 income as far as freelance work, tho investment income/dividends are estimated for somewhere in the realm of 60-65k for 2023. I assume that factors into the total income at 100% for the ACA
calculation?

Part of me says, if i'm looking at coverage just for a few months til April, the plan i'm on now is working ok and out of simplicity it'd probably be easiest to just stay on this one...in which case i assume i would just call them directly to 're-sign' for it. However, i gather it might be more cost-smart to look for a lower-premium option (with subsidy) on the ACA marketplace if I suspect i will probably have less work income in 2023 than 2022...and also there's the fact that i'll cancel and go to Medicare in April....

Hopefully someone who is 100% sure will chime in but I think you have to actually sign up thru the marketplace rather than just calling your current provider. You definitely have to if you qualify for any subsidy. With an income that high it seems unlikely you would get a subsidy though.

 

[orchid55]

If you do nothing you will automatically be signed up for the same ACA policy you are on now. You don't have to call them - they are happy to take your money.

 

[Another Reader]

The one thing you should check is whether your concierge doctor will accept Medicare. Many do not because they refuse to deal with Medicare's restrictions and low reimbursements. I'm having to pay providers that do not accept Medicare to get any help with Long Covid. These providers have zero interest in Medicare and some are quite up front about it.

With private insurance, your doctor can order any diagnostic or treatment and it's up to you to duke it out with your insurance company if the company doesn't want to cover it. Medicare is insidious because your doctor knows what is covered under the Medicare flow charts and will prescribe accordingly. You never know if you have been offered the best diagnostic or treatment unless you research the problem yourself.

In my view, Medicare is very poor insurance for anything unusual. I wish there were a private alternative.

 

[RetiredAndLovingIt]

I also will move to Medicare next year and am curious how the ACA subsidy gets reconciled in 2023. Let's say that my income is low Jan-Jun and then at the end of the year (December) I do a big Roth Conversion which bumps my total yearly income up quite a bit. Does that income somehow factor into my subsidy reconciliation or not? I'm thinking it shouldn't but what do I know. I appreciate any feedback, I'm sure it must come up a lot.

 

[aaronc879]

I also will move to Medicare next year and am curious how the ACA subsidy gets reconciled in 2023. Let's say that my income is low Jan-Jun and then at the end of the year (December) I do a big Roth Conversion which bumps my total yearly income up quite a bit. Does that income somehow factor into my subsidy reconciliation or not? I'm thinking it shouldn't but what do I know. I appreciate any feedback, I'm sure it must come up a lot.

The subsidy is based on you MAGI. It does not matter what time of year you make the income. ROTH conversions count as MAGI and will reduce your subsidy.

 

[camfused]

You just do the same thing this year as you did last year to get on the ACA. You go to the healthcare marketplace, pick a plan, and sign up. I do it every year, almost the same way I used to have to do it via my employer plan each year. Even when you stay on the same plan, you still re-up.

Then, when your medicare eligibility window opens, you contact Medicare, get signed up, and cancel the ACA plan. This is usually 15 or 30 days before your bday, but there are plenty of threads on when to sign up for medicare.

I would not mess around with any cheaper short term options as they often lack comprehensive coverage, and have caps. Not a good time to get hit by a bus.

I believe what most are saying is to sign up 3 months before your birth month, and cancel ACA on the day before your birth month starts.

 

[Dtail]

The subsidy is based on you MAGI. It does not matter what time of year you make the income. ROTH conversions count as MAGI and will reduce your subsidy.

True, but if one only has ACA coverage for 2 months let's say and then goes on Medicare for the rest of the year, does the full year MAGI get prorated for just the 2 months?
For those of us managing our MAGI, but not wishing to in year 65 of Medicare, it is an interesting situation.

 

[aaronc879]

True, but if one only has ACA coverage for 2 months let's say and then goes on Medicare for the rest of the year, does the full year MAGI get prorated for just the 2 months?
For those of us managing our MAGI, but not wishing to in year 65 of Medicare, it is an interesting situation.

The subsidy you get in those 2 months would depend on your total MAGI for the year. Worst case, you withdraw a lot that year and have a high income that eliminates any subsidy. That maybe costs you at most a couple grand. I say BTD if you can afford it.

 

[stevemac]

I believe what most are saying is to sign up 3 months before your birth month, and cancel ACA on the day before your birth month starts.

I have also seen advice to wait until up to 3 months after your birthday if Medicare will be more expensive per month than ACA (which it will be for me). Just a thought.

 

[audreyh1]

I have also seen advice to wait until up to 3 months after your birthday if Medicare will be more expensive per month than ACA (which it will be for me). Just a thought.

I’m pretty sure your ACA insurance policy no longer covers you once you turn 65.

 

[stevemac]

I’m pretty sure your ACA insurance policy no longer covers you once you turn 65.

Ah, that's an important point to research! Thanks.

 

[stevemac]

I’m pretty sure your ACA insurance policy no longer covers you once you turn 65.

This is a very valuable comment, as research proved. Here is a concise explanation from Forbes:

However, someone paying less than $100 per month due to subsidies might not feel the need to look into Medicare.

Here is the problem. If you are eligible for Medicare Part A, which is typically given free to anyone that turns 65, you will no longer be eligible for any tax credits or subsidies by the federal government no matter what income tax bracket you fall under. That would mean that if you were to keep the marketplace plan after age 65 when you are eligible for Medicare:

The marketplace health plan would go to full costs.
You would miss the one-time seven-month Initial Enrollment Period for Medicare and could face delays and may need to pay a penalty.
This is why it is so important when you are turning 65 to make sure to cancel your individual health plan through the marketplace the month before you turn 65 and take your Medicare benefits. It can be tempting to keep the marketplace health plan if you are paying less than $100 per month and it is not automatically canceled.

But remember, if you are eligible for Medicare Part A, the tax subsidies will no longer be available to you. The federal government might not catch it right away, but when it does, you will get a big bill for the tax subsidies when you file your taxes.

So much for delaying Medicare a few months to save a few bucks!