Early Retirement, Medicare, and How the Affordable Care Act Affects Seniors

Affordable Care ActChances are, if you’re alive, you know: the Affordable Care Act (commonly referred to as ‘Obamacare’) is here, and it’s confusing. Between trumped up rumors of plan cancellations and high penalties for those who don’t comply, more misconceptions seem to flood our screens than useful information. However, even if they are buried under layers of content, the facts exist. If you are 50 or older and retired or considering retirement, here are the facts that you need to know about the Affordable Care Act (ACA).

No Surprises

Before ACA, seniors often found themselves surprised by the cost of healthcare—especially if they were retiring before the age of 65. While some employers extend health benefits to retirees, many don’t, and finding affordable private coverage required access to the fountain of youth. Today, it is still legal to charge seniors five times the amount a 20-year-old would pay for the same policy on the private market—a cost that will be reduced to three times the amount in 2014.

Coverage will be much easier to find with the Health Insurance Marketplace, which will allow you to compare plans side-by-side.  Premiums may look more expensive at a first glance, but retirees living on less than they were while employed will qualify for subsidies that will help cover the cost of their premiums in the form of a tax break. If you’re under 65 and shopping on the marketplace, keep the amount of this subsidy in mind—your premium may appear to be over $1,000, but your tax break could lower it to less than half the cost. This amount is often lower than what you’d be paying for your COBRA through your former employer! The ACA will make it easier for you to retire before you’re eligible for Medicare, and you’ll qualify for coverage even if you have a preexisting condition.

Medicare Eligibility

If you’re over 65 and qualify for Medicare, you will be happy to know that Medicare still exists, and it is separate from the healthcare exchanges. In fact, the ACA will strengthen your policy if you qualify for Medicare. If you have Medicare Part D and have faced the price of prescription drugs in the doughnut hole, you’ll be happy to know that this gap will be shut for good by 2020. For now, you will receive a 20% discount on generic prescriptions and more than a 50% discount on brand-name prescription drugs while you are in the coverage gap.

Medicare now covers certain types of preventative care deductible-free, such as mammograms and colonoscopies. It also covers a free yearly “wellness” visit. The ACA has also extended the lifespan of the Medicare Trust—the fund has been extended until at least 2026.

Still Covered?

If you’re covered under your employer’s plan, the ACA also benefits you. More preventative care will be covered—everything from the flu shots to cholesterol screenings. All plans, whether purchased from the exchange or not, must cover the essentials starting in 2014, including hospital and emergency care, doctor visits, prescription drugs, and mental health.  If you have kids under the age of 26, then they can stay under your plan which saves you and them a ton of money.

So even if it seems maddening on the surface, the ACA will allow everyone to have access to the insurance that is appropriate to their needs. If you need help with the exchange, many businesses and community centers have events and programs that can help you through the process. Remember that insurance coverage is an important element to a successful retirement, and if you’re ready to retire early, the ACA has you covered.

Guest post written by: Edward Oberg, currently on hiatus from the insurance game, now spends his time blogging for The Hartford and hunting for monster brook trout that delight in mocking him. He has vowed to defy the accepted wisdom regarding boring insurance reps by being extremely interesting.