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Short term health when waiting for Medicare

Short term health insurance has become very popular with one particular group.

 

Seniors!

Many people who are waiting for Medicare to kick are finding out that short term may be much less expensive than the alternatives.

 

We can't just look at monthly premium however so let's take a look at the use of this type of coverage.

If we can save money till Medicare starts up, then that's great news!

First, let's talk about the Medicare enrollment process and time-table


Medicare enrollment timing

Medicare has a very strict and sometimes complicated set of rules.

 

Of course!

Most people are eligible for Medicare when they turn age 65 or lose group health insurance.

There are some more minor triggers but the vast majority fall into one of the two situations above.

 

A person can get Medicare after age 65 but they may have a waiting period for waiting.

A person is generally eligible for Medicare on the 1st of the month that they turn 65 in.

For example, if you turn 65 on Dec 15th, you will be eligible for Medicare Dec 1st.

You want to make sure your Part A and Part B is elected before then at www.medicare.gov

 

Most people can do it right online.

 

We've written extensively on the whole Medicare enrollment process and Medicare supplements here but we'll assume you're up to date on that front.

 

So where does short term health coverage come into play with so-to-be Medicare enrollees?

 

There are really two groups where we've seen an explosion of activity and we'll handle each separately.

  1. People who want to save on their premium as they get closer to Medicare start date
  2. People who enroll late and have a waiting period till Medicare starts

 

These situations have different requirements so let's tackle each of them separately.


Short Term till Medicare starts

Some people are fully insured (or not) and find that temporary insurance is much cheaper till Medicare kicks in.

 

Here's the deal...

Health insurance rates are primarily driven by age.

Age 60-64 is the most expensive time to insure by far.

It's not uncommon for a high deductible bronze ACA plan to run $600/month and that's for a $6000 deductible!

 

In the 12 months prior to age 65, many people look at Short Term as a way to bring down their monthly cost....

for a short period of time!

 

That's literally the definition of short term health insurance.

They know Medicare is coming.  It's guaranteed issue (can't be declined based on health).

Unless something goes terribly wrong with the US government, they know Medicare will be there soon.

 

Rather than pay $700-900/month per person, they opt for short term instead which probably runs about $300/month.

 

Which seniors does this work well for?

  1. In good health
  2. Not eligible for a tax credit or able to enroll in Covered California plans
  3. Savings on premium outweighs penalty (or 10/12ths of it)

 

That's the ideal candidate.

 

 

Let's discuss each item, especially the last two.

 

Health qualification and short term

Short term is different than ACA permanent plans (including Covered Ca) in a few important ways (aside from being cheaper).

We generally want to be in good health for the following reasons:

 

Short Term health plans:

  1. Is medically underwritten - we need to qualify based on health
  2. Does not cover pre-existing conditions
  3. Has limited office visits
  4. Does not cover RX or preventative
  5. Is not guaranteed renewal (must re-apply after maximum # of months)

 

Short term is really catastrophic coverage.

There to cover the big bills...at a lower cost.

For many people, that's not a bad bet since they really want to just cover major medical anyway.

 

So that's the health consideration...what about the other two.

 

The tax credit and tax penalty are direct results of the ACA health law.

They're important in this calculation. That's why we want you to know the full story!

ACA Tax Credit and Short term

The tax credit assumes we are either already enrolled or able to enroll in Covered California.

 

Here are the main points:

  1. Tax credit is based on income (see chart below)
  2. We must either be enrolled already or able to enroll (Open Enrollment or SEP)

 

 

 

The tax credit piece isn't easy.

 

We recommend a quick call to size up if you might eligible.

You can call 800-320-6269 to see if you're eligible. As Certified Covered Ca agents, our services are free to you.

Here's the net net.

 

If you're eligible to enroll AND get a tax credit, that's probably the best option.

 

First, the tax credit can bring down the cost significantly which makes it competitive if not better than short term health.

 

Secondly, you won't subject to the tax penalty.

More on that now!

Tax Penalty and short term

With an ACA compliant plan, you will not have tax penalty.

Short term plans are not ACA compliant!

You will have the penalty so we need to figure that into the calculation.

The savings on premium may still offset the tax penalty.

 

We can help with calculation in about 5 minutes!

 

Here's the broad strokes of the tax penalty:

 

 


Recap of Short Term till Medicare

So if

your Medicare is going to start in under 12 months

AND

you are not eligible for a tax credit or to enroll in an ACA compliant plan

AND

You're in good health

AND

The tax penalty doesn't outweigh your short term health premium savings...

 

Short term might be a good option.

 

It's a lot of AND's but there are 1000's of seniors that are coming to that conclusion and saving money until Medicare starts.

What about the second group...those that enroll in Medicare late and have a waiting period till it starts?

Short term may be the only option!


Waiting Period for Medicare

Some people miss the Guaranteed Issue triggers for electing Medicare.

 

Generally, this is when turning age 65 or losing employer based health insurance.

 

Depending on how far out a person is from the trigger, they may have to wait for their Medicare to start.

For these people who are usually over age 65, ACA compliant plans may not be available and this includes Covered California or they may also be outside of Open Enrollment.

 

Until Short Term came around, we used to have no real options for these people over age 65 who are waiting for Medicare to start.

Now we do.

 

Short term is a great interim coverage to bridge the gap until Medicare starts.

 

We do need to be in good health to qualify for coverage but at least we have an option now.

If you're waiting for Medicare to kick in, run your Short term quote and see what pricing is available to you.


 

Call us at 800-320-6269 or request your Short Term Health Quote.


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About CalShortTerm

 

Short term health insurance can be a valuable tool to help protect people during transitional times.  Understanding the pro's and con's of short term insurance versus ACA compliant plans is Invaluable

We are Licensed California Agents with 20+ years of experience helping 1000's of California individuals and families.

Call us. you will be pleasantly surprised 800-320-6269

 
 
 
 
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