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I am turning 65 years old next month, but I am not entitled to Medicare without having to pay a premium for Part A because I have not worked long enough to qualify. Can I sign up for a Marketplace plan?

Yes, in general, people age 65 or older who are not entitled to premium-free Medicare can purchase health insurance coverage in the Marketplace (except undocumented immigrants).  If you sign up for a Marketplace plan, you will be eligible for premium tax credits to make the coverage in the Marketplace more affordable if your income is between 100% and 400% of the federal poverty level ($12,140 to $48,560 for an individual in 2019).

Keep in mind that if you are able to continue working, you may be able to earn enough work history to qualify for premium-free Medicare in the future.  So another option for you to consider would be to sign up for Part A and Part B coverage when you turn 65 (you will have to pay a premium for both Part A and for Part B), and when you become eligible for premium-free Part A through your work history, you will then only have to pay a premium for Part B.

I am about to turn 65 and go on Medicare, and my income is $120,000. I am not married. I know that people with higher incomes are required to pay higher premiums for Medicare Part B and Part D. To avoid paying these higher Medicare premiums, can I sign up for health insurance from a Marketplace plan now instead of enrolling in Medicare when I turn 65?

If you are not yet enrolled in Medicare, you can buy health insurance coverage through the Marketplace before you turn 65, and if you have a Marketplace plan, you can choose to renew it after you turn 65.  But once you turn 65 and become entitled to Medicare coverage, you cannot buy a new Marketplace plan.  This is because insurers are prohibited from selling health insurance coverage that duplicates what you have under Medicare, if they know you are covered by Medicare.

If you are considering renewing a Marketplace policy after you turn 65 and become eligible for Medicare, there may be downsides to this choice.

First, your total costs could be higher with a Marketplace plan than with Medicare, even if your income is high enough that you are required to pay income-related premiums for Medicare coverage.  At your current income level in 2018, you would pay about $4,000 in annual Medicare premiums ($3,215 for Part B and around $823, on average, for Part D.)  You would also likely buy a Medigap supplemental policy to help cover Medicare deductibles and limit annual cost sharing.  The average cost of Medigap is roughly $2,000, though premiums can vary widely depending on the plan you choose, your age, and where you live.

By comparison, premium for a Marketplace policy will vary depending on where you live, your age, and the plan you choose.  In 2018, the national average premium for the lowest cost bronze plan for a 64-year-old was about $9,500 and the average annual deductible under bronze plans was about $6,000.  Most Marketplace participants pick silver plans. On average, the premium for the benchmark silver plan for a 64-year-old was about $13,500 in 2018 – much higher than the total premiums for Medicare – and the average silver plan deductible was about $4,000.  Also keep in mind that the combination of Medicare plus a Medigap policy would offer you more comprehensive coverage with lower overall out-of-pocket costs than a Marketplace plan.

Second, you should also be aware there would likely be differences in access to doctors, hospitals, and prescription drugs between Marketplace plans and Medicare.

Third, keep in mind that if you sign up for a Marketplace plan, rather than enroll in Medicare Part B when you are first eligible to do so, and then later you decide to sign up for Medicare, you may be required to pay a penalty for delaying enrollment in Medicare Part B.  Your monthly Part B premium may go up 10% for each year that you could have had Part B, but didn’t.  You may also owe a late enrollment penalty for Part D drug coverage, which is equal to 1% of the national average premium amount for every month you didn’t have coverage as good as the standard Part D benefit Marketplace.

Finally, if you have Marketplace coverage when you become eligible for Medicare, and decide to drop your Marketplace plan, you need to contact your plan to terminate your Marketplace plan yourself.  It will not happen automatically when your Medicare coverage begins. Your insurer cannot terminate your Marketplace coverage unless you tell them you want this coverage to end.

My income is less than 400% of the FPL and I smoke. Will the tobacco surcharge to the premium be covered by my premium tax credit?

No. A tobacco surcharge is not covered by the health insurance premium tax credits. The premium tax credit will reduce what you have to pay for the regular health insurance premium, but you will have to pay the entire additional tobacco surcharge. For example, if the regular premium for a policy is $200 per month and you qualify for a premium tax credit of $75 but you also use tobacco and so would be subject to a 50% tobacco use surcharge, you would have to pay $225 for that policy ($200 for the regular premium minus $75 for your premium tax credit plus $100 for the tobacco surcharge.)

How often during the year can I adjust my premium tax credit amount? What documentation is required to make an adjustment? How long after I request the adjustment will it take effect?

There is no limit to the number of times a person may report income, family or insurance-eligibility changes to the Marketplace. Changes that are reported by enrollees will be verified by the Marketplace. Then the Marketplace will send you a notice (called a redetermination notice) showing your revised eligibility for premium tax credits and cost-sharing reductions. In addition, people can always ask the Marketplace to provide them with a monthly advance premium credit below the amount the Marketplace determines based on the household’s income if they want to minimize the chance of needing to owe money at the end of the year.

The adjustment will take effect by the first day of the month following the date of the redetermination notice. For example, if an enrollee reports a change in income on June 25 and the Marketplace verifies the change and sends a redetermination notice to the enrollee on July 3, the change will be implemented on August 1.

I live in a state that has chosen not to expand Medicaid. When I applied for Marketplace coverage, my income was just above the poverty level, so I applied for and received an advance premium tax credit. What happens if I lose my job toward the end of the year so my annual income will be just under the poverty level? Will I have to pay back the advanced subsidies I’ve received?

No.  If you were determined eligible for subsidies when you signed up, and your income turns out to be lower, you will not have to repay the subsidies you received.

I am self-employed with uneven income. When I applied for premium tax credits during Open Enrollment, I said I expect to earn much less next year than I did last year. The Marketplace said I must provide more documentation but didn’t say what to send. How can I find out?

Unfortunately, in most states so far, the data match inconsistency notices are not very specific in describing the additional documentation that is required.  Instead, notices list generic types of types of income documentation without specifying the documentation appropriate for you.  If you are self-employed and estimate your income next year will be significantly less than what you reported on your most recent tax return, you should provide copies of any documents that support your estimate.  Make sure to provide copies and not original documents.  If you don’t have documents, a signed statement explaining your estimate may be accepted.  Be sure to include your name and ID number, a description of the income you expect to earn next year, a description of how you arrived at your estimated income amount, and an explanation of why other documentation is not available.

My income is uneven and hard to predict because I am self-employed. Most years I make between $20,000 and $30,000, though two years ago I did especially well and earned $35,000. How will this affect my application for premium tax credits for the coming year?

In reviewing your application, the Marketplace will compare the amount of income you estimate for next year to the most recent information about your income that is available (usually, that will be the tax return you filed this year reporting last year’s income.)  Generally, if that amount differs from the amount you put on your application by more than 25% or $6,000 (whichever is greater), you might receive a data match inconsistency notice from the Marketplace and you’ll need to provide more documentation.

In cases of an income data match inconsistency, the Marketplace will ask you to provide documentation within 90 days.  During that period, you can get premium tax credits based on the income you attested to in your application.  However, if you have not resolved the data match inconsistency within 90 days, the Marketplace will adjust or end your advance premium tax credit based on the most recent income information it can find.

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