Q: I am 60 and retired. I can get insurance from my former employer but it is very expensive. Do I qualify for insurance under the exchanges?
A: You’ll definitely want to talk with a broker or navigator about your specific situation. Depending on your income level, you may qualify for Medicaid. You can check to see if your state has expanded Medicaid to most low-income adults.
If you don’t qualify for Medicaid, subsidies to help purchase private health insurance are available in the exchanges for people with incomes between 100 percent and 400 percent of poverty level. (The lower threshold is 139 percent of the poverty level in states that have expanded Medicaid, since Medicaid is available below that level.) However, subsidy eligibility requires that you not be enrolled in a retiree health plan from your former employer, and that – if available – you’ve waived your right to any retiree-only health reimbursement arrangement (HRA) offered by your former employer.
Subsidies and access to retiree health benefits
For active employees, premium subsidies aren’t available if they have access to an employer-sponsored health plan that offers minimum value and is considered affordable to the employee under the ACA’s guidelines (costs the employee no more than 9.78 percent of household income for just the employee’s coverage in 2020). It doesn’t matter whether active employees are actually enrolled in the plan; they’re ineligible for premium subsidies in the exchange if the plan is available to them.
But for retirees, the guidelines are more relaxed. Retirees who have access to a plan that provides minimum essential coverage can still enroll in a subsidized exchange plan instead, as long as they don’t enroll in their former employer’s plan. And if the employer offers a retiree-only HRA instead of extending minimum essential coverage to retirees, retirees can still access exchange subsidies instead, as long as they prospectively waive coverage under the HRA.
Exchange enrollment rules
If you’re enrolled in a retiree health plan from your former employer, you’ll need to wait until open enrollment to drop that plan and switch to an exchange plan, unless you experience a qualifying event during the year. Voluntarily dropping your retiree health benefit is not a qualifying event, so you wouldn’t be able to drop your plan mid-year and switch to an exchange plan at that point.
If you lose access to your employer’s minimum essential coverage when you retire, you’re eligible for a special enrollment period in the exchange at that point. This is true regardless of whether you’re given the option to switch to a retiree-only health plan offered by your employer. But if you opt for coverage under the retiree-only plan, you can’t choose to drop it later on and enroll in a plan through the exchange, except during open enrollment or if you experience a qualifying event.
Some employers offer a program that essentially allows the employee to get a discount on the cost of retiree health benefits for a certain amount of time (the actual amount of time can vary considerably, depending on the circumstances). If you’re getting subsidized retiree health benefits and then the subsidy is eliminated, you may qualify for a special enrollment period for individual market coverage at that point. CMS has confirmed that retirees in this situation would qualify for a special enrollment period if an employer subsidy for retiree health benefits were to be eliminated or reduced, causing the retiree’s costs for the coverage to increase to more than 9.78 percent of the retiree’s income (in 2020; that percentage threshold adjusts each year).
Talk with your former employer’s HR department, as well as a local navigator, broker, or your state’s exchange, and let them know the specifics of your situation to see what your best option is.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.