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Covered California and Obamacare related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the Covered California and Obamacare knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.


Keep Covered California after Age 65?

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Question: I am under a Covered California Policy and turn 65 in August. Can I still keep my Covered California policy (and contribute to my HSA) for three months past my 65th birthday? Reason, I have reached my Deductible and Out of Pocket Maximum due to an unplanned surgery. Medicare allows me to enroll 3 months past my 65th birthday.

Answer: No. You cannot keep your Covered California coverage once you are eligible for Medicare - the month you turn 65 - even if you were to delay your Medicare enrollment. Also, you cannot make contributions to a Health Savings Account after age 65.

4 Comments

Thanks. I was the person who asked the question and am not currently collecting Social Security. However I did decide to apply for Medicare on May 1. Somehow whenever I try and work the system (as is this case) I never win. In all probability my MAGI for 2015 will be over the 400% FPL and not eligible for a tax credit subsidy so I decided to enroll for Medicare and not deal with the potential hassle. Thanks again.

I want to add one important caveat to my previous answer.

The person who asked this question should check his current Covered California policy to make sure that there are no provisions that effectively require him to file for Medicare as soon as possible (i.e. the first 3 months of his enrollment period). He should also check the policy to see if it states that benefits will be changed (or paid differently) once he becomes eligible for Medicare. A health insurance company may define “eligibility” for Medicare differently than the federal regulation, and may leave Medicare as the primary payer as soon as he turns age 65 (which may sabotage his reasons for staying with Covered California for a few months after age 65).

Assuming that Obamacare remains the same for the next few years, I will be in a similar situation when I turn 65 as the person who asked the question. My Covered California plan is cheaper and has lower co-pays/out-of-pocket costs than Medicare, so the thought crossed my mind that I could delay my Medicare application until the last month of my initial enrollment period. That way, I could stay on the more generous Covered California plan for the first 6 months after I turn 65. I’ve decided that it’s not worth doing because of the possibility of an administrative snafu that could end up creating a hassle and forcing me to file an appeal. The person who asked the question will have to weigh the same considerations before proceeding with his plan to delay Medicare enrollment.

I have a client who enrolled in Covered California in January 2014 at a certain income which gave her a APTC of $709 and a final premium of $156.60. In May 2014, she became eligible for Medicare and terminated her Covered California participation. Late last year and subsequent to her termination, she withdrew funds from her IRA which completely changed her APTC. Is she responsible for paying the under estimated APTC, especially since she was not enrolled in the program at the time of the increased income?

The answer is YES as long as the person who asked this question is not AUTOMATICALLY enrolled in Medicare at age 65. And from the wording of the question, it seems like this person will not be automatically enrolled. Therefore, it sounds like he can indeed proceed as he proposes.

A person who is ALREADY receiving social security benefits (or railroad benefits) prior to age 65 is AUTOMATICALLY enrolled in Medicare in the month they turn age 65. If such a person is also already on a Covered California policy, he is legally allowed to keep that policy past age 65 but is no longer eligible for premium tax credits or cost-sharing reduction. (That’s why most people drop and stop paying for their Covered California policy as soon as they get Medicare.) However, if someone insists on keeping both Medicare AND his Covered California policy, there is a question of who would be the primary payer in this situation. This issue is very unclear and frankly I would be very nervous about assuming that I could receive health benefits past age 65 under the terms of only my Covered California policy. However, regardless of who is the primary payer, such a person can no longer contribute to an HSA.

HOWEVER, the person asking this question is talking about the necessity of ENROLLING in Medicare during his initial enrollment period. Therefore, if we assume that he is NOT already receiving social security or railroad benefits, then he will have to apply for Medicare (and benefits), and his initial month of entitlement to Medicare will depend on which month he applies:

http://medicare.gov/sign-up-change-plans/get-parts-a-and-b/when-coverage-starts/when-coverage-starts.html

IF a person’s eligibility to Medicare is delayed past age 65 because he waited until the last 4 months of his initial enrollment period to apply, the federal regulations very clearly indicate that such a person is not considered to be “eligible” for Medicare until the first month that he is actually covered under Medicare. Therefore, such a person can continue to be covered under Covered California AND receive premium tax credits and cost-sharing reduction for the months after he turns age 65 until the first month of Medicare eligibility. Look at the text and examples under c(2):

https://www.law.cornell.edu/cfr/text/26/1.36B-2

Since there are special Medicare rules for persons born on the first of the month, let’s assume for the sake of simplicity that the person asking this question turns age 65 on August 3. IF for example he is trying to stay on Covered California thru the end of this calendar year, he can apply for Medicare in October, in which case his Medicare will not start until January 2016. For the months of August thru December 2015, he is NOT considered eligible for minimum essential coverage and therefore can use his Covered California policy AND receive premium tax credits and cost-sharing reduction if applicable.

Also, since he is not enrolled in Medicare for the months of August thru December, he IS allowed to make HSA contributions during those months. This was clarified back in 2004 (see question 2 under I. Eligible Individuals):

http://www.irs.gov/irb/2004-33_IRB/ar08.html#d0e1617

I’m not sure which month the person wants to end his Covered California coverage and begin Medicare, so if it’s a month other than January 2016, he will have to choose a month other than October to apply for Medicare.

By the way, I have no idea whether the federal data hub is handling such situations correctly. Month of Medicare eligibility seems like a straightforward determination, so Covered California should receive the right information and properly allow your policy to continue unaffected for a few months past age 65. But there’s always a chance of a screw-up in which case you would need to file an appeal (you will win since the law’s on your side, but it would be a hassle).

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