By Louise Norris and Andrew Sprung
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It's my pleasure to team up in this post with Louise Norris, a health insurance broker and ACA chronicler extraordinaire at healthinsurance.org and verywell.com. At those two sites, Louise has effectively created a constantly updated encyclopedia of the ACA, covering a host of enrollment situations, regulations, marketplace features, and histories of each state marketplace. She has done similar work about Medicare at Medicareresources.org.
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For most Americans, enrollment in Medicare is cause for celebration. At last: affordable, reliable insurance you can’t lose. Medicare enrollment can entail some complex determinations (do I qualify for any Medicare Savings Programs?) and decisions (Medigap or Medicare Advantage?) For many seniors, too, the burden of premiums and out-of-pocket expenses is heavy. Still, by American standards, Medicare is reliable and affordable.
For “near-elderly” couples (under age 65) who are insured through the Health Insurance Marketplace established by the Affordable Care Act, however, the transition of the elder spouse into Medicare can bring sticker shock and extra expense. That’s because ACA premium subsidies are designed so that enrollees pay a fixed percentage of household income for the benchmark (second cheapest) silver plan in their area – and they pay the same percentage (reduced through 2022 by the American Rescue Plan enacted in March 2021) regardless of how many people need insurance.
A couple that was paying 8% in premiums for a benchmark silver plan to cover both of them will still pay 8% of income when only one of them is covered in the marketplace. When one of them transitions to Medicare, they will pay the marketplace premium plus the Medicare premium. In the illustration below, they will pay somewhere between 11% and 14% of income in premiums to cover them both, depending on whether the Medicare enrollee opts to buy a Medigap policy.
