Turning 65: How to Smoothly Transition from Your ACA Plan to Medicare

Approaching your 65th birthday is a major milestone, especially when it comes to health insurance. If you're currently enrolled in an Affordable Care Act (ACA) marketplace plan, it's essential to understand the steps for a seamless transition to Medicare. Proper planning can help you avoid coverage gaps and costly penalties.

Key Principle: Medicare Replaces ACA Subsidies

The most important rule to remember is this: once you become eligible for premium-free Medicare Part A, you are no longer eligible for the premium tax credits (subsidies) that make ACA plans affordable.

Continuing to receive ACA subsidies after your Medicare coverage starts can result in having to pay back those subsidies to the IRS. Therefore, you must actively disenroll from your ACA plan and enroll in Medicare.

Your Medicare Initial Enrollment Period (IEP)

For most people, the time to sign up for Medicare is during their Initial Enrollment Period (IEP). This is a 7-month window that includes:

• The 3 months before your 65th birthday month
• Your 65th birthday month
• The 3 months after your 65th birthday month

To ensure your coverage starts on the first day of your birthday month, you should sign up during the first three months of your IEP. Missing this window can lead to late enrollment penalties for Medicare Part B and Part D that you could pay for the rest of your life.

Step-by-Step Transition Plan

1. Confirm Your Medicare Eligibility: Most U.S. citizens or legal residents who have worked and paid Medicare taxes for at least 10 years are eligible for premium-free Part A. You can confirm your eligibility on the Social Security Administration (SSA) website.
2. Enroll in Medicare: Sign up for Medicare Part A and Part B through the SSA website. This is the first and most critical step.
3. Choose Your Coverage: Decide if you want Original Medicare (Part A and B) paired with a Medigap policy and a Part D prescription drug plan, or if you prefer a Medicare Advantage (Part C) plan.
4. Cancel Your ACA Plan: Once you have your Medicare card and have confirmed your Medicare start date, you must contact the ACA marketplace to cancel your plan. Time the cancellation to end the day before your Medicare coverage begins. For example, if your Medicare starts June 1, cancel your ACA plan effective May 31.

Warning: Do not simply stop paying for your ACA plan. You must formally cancel it through the marketplace to ensure your subsidies stop correctly.

Internal Resources

• ACA Subsidy FAQs
• The Ultimate Guide to Using an HSA with Your ACA Plan
• COBRA vs. ACA Marketplace: Making the Right Choice
• Recommended Tools for Managing Your Health Insurance