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Cancel Medicare for Subsidized Covered California?

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Question: Can a senior citizen who is paying for Part A of Medicare because he has not worked in the US cancel Medicare and sign up ACA to take advantage of qualified subsidy?

Answer: This question was answered earlier in the CAHBA Q&A Forum by Premier Agent Max Herr. He is Max’s unedited answer.

Courtesy of the PPACA, persons age 65 and older are now required to enroll in Medicare unless covered by another health plan (generally employer-sponsored). As a result, no one over age 64 is eligible for premium tax credits regardless of income.

The exception to the Medicare enrollment is based on residency. Legal immigrants over age 65 are eligible for enrollment in Medicare if they have been in the US at least 5 years. Prior to that, they must obtain “minimum essential coverage” in some other manner.

Persons over age 65 who do not have fully insured status (40 credits) pay a premium of up to $426 in 2014 (less than 30 credits, the premium is reduced for persons with 30-39 credits). Failure to enroll in Medicare Part A when first eligible (at age 65 for most, or when the five-year residency threshold is crossed if later) means a 10% premium penalty for twice the length of time a person was not enrolled in Part A.

The Part B premium penalty remains a lifetime penalty. The 1% per month premium penalty for Part D is also a lifetime assessment.

So the temporary solution for this German couple, if they have not been in the US for five years is to obtain any form of minimum essential coverage. Once eligible for Medicare Parts A and B, the monthly cost, even at the maximum of $426 for Part A + $104.90 for Part B, is likely to be a lot lower than a Gold plan for a 64-year-old (or older) person.

At $75,000 income, they are well below the joint MAGI threshold for a Part B premium “enhancement”.

5 Comments

The law is also designed to be flexible by allowing states, from 2017 onwards, to apply for a “waiver for state innovation” from the federal government that allows them to experiment with their own state-based system, on condition that it meets certain criteria.[171] To obtain a waiver, a state must pass legislation setting up an alternative health system that provides insurance at least as comprehensive and as affordable as that the ACA would, covers at least as many residents, and does not increase the federal deficit.[172] Provided a state meets these conditions, receiving a waiver can exempt states from some of the central requirements of the ACA, including the individual mandate, the provision of an insurance exchange, and the employer mandate.[173] The state would also receive compensation equal to the aggregate amount of any federal subsidies and tax credits for which its residents and employers would have been eligible under the ACA plan, if they cannot be paid out due to the structure of the state plan.[171]

As of November 19, 2013, only Vermont, a state in which Republicans are but a small minority, in May 2011, has enacted an alternative plan — a state-based single-payer system for which they intend to pursue a waiver to implement.[174][175][176]

I copied this from Wikipedia… So please include the URL http://en.wikipedia.org/wiki/PatientProtectionandAffordableCareAct#Insuranceexchangesandtheindividualmandate

Steve …

I’m not going to debate you here about how YOU read the PPACA. Section 1401 et seq. is not the issue — those sections deal with calculating the tax credits and rules for cost-sharing reductions for “eligible insureds”. But who is an eligible insured. For that you have to go back to the section I discussed.

How you fail to understand the applicability of Section 1331 is beyond me. States were given the flexibility of establishing their own exchanges. California did exactly that, and Section 1331 does not permit the state to alter the definition of eligible persons contained therein.

You are free to read it as you will, but to say Section 1331 is inapplicable is foolish. To base your response on Section 1401 et seq. is worse.

Michael asked: “if someone who is initially eligible for Medicare Part A coverage has the right to not initially enroll in Medicare Part A (similar to cancel), to thereby find eligibility for ACA tax credit subsidy.”

The answer is NO. And here is the reason why not:

Persons who are “fully insured” under Social Security are “automatically enrolled” in Medicare Part A at age 65, like it or not. It may not be rejected, but may be made primary to any small employer health plan. It will be secondary to any large employer health plan and is always secondary to Workers’ Compensation. A person may choose not to use their Medicare benefit, but that’s not the same as being able to reject or “cancel” it.

New in 2013, however, as a means of funding Obamacare is a 10% premium penalty for persons who are age 65 or older and not enrolled in Medicare Part A when first eligible. This specifically refers to persons with less than 40 “credits” under Social Security. There is a Part A premium for persons with 30-39 credits, and a higher premium for those with less than 30 credits.

Just a little coercion on the part of Uncle Sam. Some might call it blackmail or extortion.

Thanks to the PPACA, which as mentioned above does not offer tax credits to persons over age 65, these persons MUST enroll in Medicare and pay the Part A premium until they accumulate 40 credits. Failure to enroll results in a 2-for-1 penalty: for every month a person has not been enrolled in Part A, they pay the 10% premium penalty for two times as many months. This is different from the Part B penalty which is a lifetime 10% per year of non-enrollment penalty.

Just your Congress diligently at work. Keep reelecting these folks and nothing will change in the future.

The rules for eligibility for APTC and purchasing health insurance through the exchange is clearly articulated in the PPACA Section 1331(e)(1)(d) and (e)(2):

(e) ELIGIBLE INDIVIDUAL.— (1) IN GENERAL.—In this section, the term ‘‘eligible individual’’ means, with respect to any State, an individual— (D) who has not attained age 65 as of the beginning of the plan year.

(2) ELIGIBLE INDIVIDUALS MAY NOT USE EXCHANGE.—An eligible individual shall not be treated as a qualified individual under section 1312 eligible for enrollment in a qualified health plan offered through an Exchange established under section 1311.

Only “qualified” persons may enroll in a health plan through the exchange. Persons who are age 65 on January 1, 2014 are not “qualified” (a person whose 65th birthday is on any day in January 2014, is considered age 65 as of January 1, 2014, per Social Security/Medicare eligibility rules).

It’s just too bad Max did not answer the question.

Max gave answer in relation to a senior citizen who has “not been in the US for five years…” Max clearly and correctly stated previously in the same post that one age 65 or older as immigrant who has not been in the U.S. for at least five years will not be eligible for Medicare coverage.

Yet the original query is in regard to a senior citizen who has ALREADY been paying for Medicare Part A coverage; therefore someone who must have been in the United States at least five years, to have found eligibility for and enroll and participate in Medicare Part A.

The general inquiry could also include query about if someone who is initially eligible for Medicare Part A coverage has the right to not initially enroll in Medicare Part A (similar to cancel), to thereby find eligibility for ACA tax credit subsidy.

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