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Qualified Health Plans and Medicare

Summary: Qualified Health Plans are health insurance plans offered through the Marketplace that must meet coverage and eligibility requirements set by the Affordable Care Act. If you are enrolled in a Qualified Health Plan and are approaching your Medicare eligibility date, there’s a few things you need to know. In this article, we’ll take a closer look at how QHPs work and what you should do once you become eligible for Medicare. Estimated Read Time: 7 min

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Table of Contents:

  1. What is a Qualified Health Plan?
  2. Qualified Health Plan Eligibility
  3. Are Qualified Health Plans the Same as Medicaid?
  4. Do I Need a Qualified Health Plan When on Medicare?
  5. Enrolling in Medicare When You Have a QHP
  6. Keeping a QHP When You’re Eligible for Medicare
  7. If You Have Small Business Health Options Program (SHOP) Insurance
  8. How Do I Find a Qualified Health Plan?

Qualified Health Plans (QHPs) are health insurance plans distributed through the Marketplace that provide essential health coverage and follow rules set by the Affordable Care Act. QHPs are one option for U.S. citizens who don’t have coverage through their employer to receive healthcare coverage.

However, if you have a Qualified Health Plan and will soon be eligible for Medicare, there’s a few things you should know. Below, we’ll explain how Qualified Health Plans work and the dos and don’ts for individuals who have a QHP and are eligible for Medicare.

What is a Qualified Health Plan?

A Qualified Health Plan, as defined by Healthcare.gov, is an insurance plan that meets the following requirements:

  • Is certified by the Health Insurance Marketplace
  • Provides essential health benefits
  • Follows established limits on cost-sharing
  • Meets other requirements set by the Affordable Care Act

Qualified Health Plans extend affordable healthcare to eligible Americans through tax credits and subsidies. All QHPs follow cost-sharing guidelines and cover general health benefits to be considered credible coverage.

On the Marketplace, health plans are categorized by metals: bronze, silver, gold, and platinum. These categories signify how you and your health plan will split costs for your coverage. Bronze plans will have the lowest monthly premiums with higher costs when using your coverage. Platinum plans will have the highest monthly premiums but have the lowest costs when you need care.

Which Qualified Health Plan is best for you will depend on your individual needs. Consider how much routine care you receive and what your monthly budget looks like.

Qualified Health Plan Eligibility

To be eligible for a Qualified Health Plan, you must mee the following eligibility requirements:

  • Be a resident of the state where you apply for coverage
  • Be a United States citizen or legal resident
  • Not be incarcerated

Though anyone who meets the above criteria can enroll in a QHP, you may not be eligible for financial assistance. To be eligible for tax credit or subsidies, you have to meet specific income requirements and not be eligible or enrolled in other types of minimum essential coverage (MEC). Types of minimum essential coverage include employer coverage (through your employer or a spouse’s), Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), TRICARE, and certain types of veteran’s health coverage.

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When you provide your household income to the Marketplace during the application process, you will find out if your income qualifies you for the premium tax credit or cost-sharing reductions. If you are eligible for cost-sharing reductions, you must choose a Qualified Health Plan that is in the silver category to get your extra savings.

Are Qualified Health Plans the Same as Medicaid?

Since Qualified Health Plans offer premium tax credits and cost-sharing reductions for low-income enrollees, people often mistake QHPs for Medicaid. For Medicare beneficiaries, it’s especially important to understand how these two forms of health coverage are different.

Qualified Health Plans are available to anyone who meets the above eligibility criteria, regardless of income. Medicaid, however, is a program specifically for individuals and families who have limited income and resources. Additionally, Medicaid can coordinate with Medicare, allowing you to benefit from both programs.

Qualified Health Plans vs Medicaid Comparison Chart

Qualified Health Plan Medicaid
Available to anyone who meets eligibility requirements, regardless of income Only available to individuals and families who have limited income and resources
Does not work with or coordinate benefits with Medicare Can coordinate with Medicare coverage
You lose cost-sharing reductions and premium tax credits when you get Medicare You do not lose your Medicaid benefits when you enroll in Medicare

Do I Need a Qualified Health Plan When on Medicare?

The short answer is no. If you are on Medicare, you will not need to enroll in a Qualified Health Plan. QHP insurance is for individuals who do not have employer coverage and are not eligible for Medicare or Medicaid.

Keep in mind that Medicare plans are not sold through the Marketplace. If you are working with an agent, it is illegal for them to try and sell you a Qualified Health plan if they are aware you have Medicare.

Enrolling in Medicare When You Have a QHP

If you are enrolled in a Qualified Health Plan and become eligible for Medicare, it is essential to be proactive. Once you qualify for Medicare, you will no longer be able to utilize your QHP tax credit or subsidy. This means that you will be responsible for paying the entire premium cost of your health plan, which could be more than the Medicare monthly premium.

You will not receive notice from your QHP that you are eligible for Medicare. So, it is important to cancel the policy as soon as you enroll in Medicare Part A and Medicare Part B to avoid unnecessary premium costs. To cancel your policy, you will need to contact your state’s Marketplace or the federal Marketplace (depending on which one you got your plan through).

Keeping a QHP When You’re Eligible for Medicare

There are a few instances in which you can be eligible for Medicare and still maintain your QHP benefits. Deciding which health coverage to utilize will depend on your circumstances.

  • You are ineligible for premium-free Part A
    If eligible to enroll in Medicare but not entitled to premium-free Part A, you may keep your QHP. If you do not enroll in any part of Medicare, you will be able to maintain your QHP premium assistance*
  • You have End-Stage Renal Disease (ESRD)
    When diagnosed with ESRD and eligible for Medicare, you can opt to keep or enroll in a QHP and still qualify for tax credits. Be sure to consider the coverage of the QHP and how it compares to Medicare before deciding which plan you keep

*If you buy Medicare Part A coverage (because you don’t qualify for a $0 premium) then decide you want to drop your Medicare coverage and get a Qualified Health Plan instead, you will not be eligible for the premium tax credit or cost-sharing reductions. Additionally, you could face a late enrollment penalty if you decide you want to re-enroll in Medicare Part A later.

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Keep in mind, if you decide to keep your Marketplace plan after you are eligible for Medicare and do not meet the above criteria, you could potentially lose your Initial Enrollment Period or owe a late enrollment penalty.

If You Have Small Business Health Options Program (SHOP) Insurance

If you work for a small business with fewer than 50 employees, your job-based health insurance may be through the Small Business Health Options Program (SHOP). This program is for employers who have less than 50 employees and want to offer health care coverage to their workers. If your health insurance is through SHOP and you are eligible for Medicare, there’s a few things you should know:

Once eligible for Medicare, you can choose to continue your SHOP plan benefits alongside your Medicare coverage.

If your employer has more than 20 employees, your SHOP plan is your primary insurance and Medicare is your secondary insurance. This means that when you receive care, your Small Business Health Options Program plan will pay first. Any costs left over (that are covered by Medicare) will then be billed to Medicare.

On the contrary, if your employer has less than 20 employees or if you are eligible for Medicare based on disability, your SHOP plan will be the secondary payer. In this case, Medicare will be billed first, then your SHOP insurance will be billed second.

If you would like to keep your SHOP plan as the primary payer and do not meet the above requirements, you can opt to defer your Medicare enrollment. However, it is important to note that some SHOP plans may require you to have Medicare as your primary insurance once eligible to receive coverage. Speak with your employer or your employer’s benefits coordinator to better understand your options when becoming eligible for Medicare.

If you are planning on delaying or more parts of Medicare, such as Medicare Part D, make sure your SHOP plan includes credible drug coverage to avoid a Medicare Part D penalty in the future.

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How Do I Find a Qualified Health Plan?

If you meet the eligibility requirements and would like to enroll in a Qualified Health Plan, you can review plans and enroll on the Marketplace at Healthcare.gov.

If you meet Medicare eligibility requirements and have questions about your QHP eligibility, complete our online rate form or call the number above to work with a licensed agent to review all of your health care options.

Sources

MedicareFAQ is dedicated to providing you with authentic and trustworthy Medicare information. We have strict sourcing guidelines and work diligently to serve our readers with accurate and up-to-date content.

  1. Medicare and the Marketplace, HealthCare.gov. Accessed March 2024.
    https://www.healthcare.gov/medicare/
Kayla Hopkins

Kayla Hopkins

Content Editor
Kayla Hopkins is an accomplished writer and Medicare educator serving as the Editor of MedicareFAQ.com. Upon completing her Communications degree from Ohio University, Kayla dedicated her time to understanding the ever-evolving landscape of healthcare. With her extensive background as a Licensed Insurance Agent, she brings a wealth of knowledge and expertise to her writing.
Ashlee Zareczny

Ashlee Zareczny

Compliance Manager
Ashlee Zareczny is the Compliance Manager for MedicareFAQ. As a licensed Medicare agent in all 50 states, she is dedicated to educating those eligible for Medicare by providing the necessary resources and tools. Additionally, Ashlee trains new and tenured Medicare agents on CMS compliance guidelines. Ashlee is a Medicare expert who specializes in Medicare Supplement, Medicare Advantage, and Medicare Part D education.

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