Health Insurance Options After a Spouse Retires
My 63-year-old spouse, who does not work, is on a health insurance plan through my employer. I will retire next month and go on Medicare. What are the options for getting health insurance for my spouse before they turn 65? Is there any Medicare coverage for dependent spouses?
Unfortunately, Medicare does not provide family coverage to younger spouses or dependent children when the older spouse qualifies for Medicare. No one is eligible for Medicare benefits before age 65 unless they are eligible due to a specified disability. With that said, here are some options for obtaining health coverage for your spouse.
Affordable Care Act: One option is to purchase an individual health insurance policy for your spouse through the Affordable Care Act (ACA) Health Insurance Marketplace. The Marketplace offers comprehensive health coverage and will not deny coverage or charge extra for preexisting health conditions.
The American Rescue Plan and Inflation Reduction Act enhanced premium subsidies for Marketplace plans through 2025. If your income falls below 400% of the poverty level after you retire – below $73,240 for a couple or $54,360 for a single person in 2023 – your spouse will be eligible for a tax credit that will reduce the amount you pay for the policy. The Marketplace also ensures that households with incomes above 400% of the poverty level will not have to pay more than 8.5% of their income for a benchmark policy.
To calculate your estimated subsidy, search online for a "health insurance marketplace calculator" and enter your family's information. To shop for Marketplace plans in your state, visit HealthCare.gov or call 800-318-2596. If you want extra help, you can search the online directory at HealthCare.gov/find-assistance to locate an agent or broker in your area.
COBRA: Another option is the Consolidated Omnibus Budget Reconciliation Act (COBRA) which is a federal law that would allow your spouse to remain with your employer's insurance plan for at least 18 months after you make the transition to Medicare. If the older spouse becomes eligible for Medicare and leaves their employer within 18 months of eligibility, COBRA coverage can continue for up to a maximum of 36 months. Not every employer plan is COBRA eligible. Contact your employer's plan administrator to find out if COBRA applies to your plan.
You should be aware that COBRA can be expensive because it requires you to pay the full monthly premium yourselves. But, if you have already met or nearly met your employer's plan deductible or out-of-pocket maximum for the year and do not want your spouse to start over with a new plan, it may make financial sense to keep your spouse's current coverage under COBRA. Even if your spouse is eligible to elect COBRA coverage, you should compare premiums from the Marketplace and those through a private insurer to see what is most affordable.
Short-Term Health Insurance: If you cannot find an affordable Marketplace plan and COBRA is too expensive, the next option is short-term health insurance. These plans are more affordable no-frills plans that provide coverage for up to 12 months and may be renewed for up to three years in some states. Be aware that short-term plans are not available in every state and do not comply with the ACA protections. They can deny sick people coverage, refuse to cover preexisting conditions and can exclude coverage essentials like prescription drugs.
Healthcare Sharing Ministries: One other coverage option you should know about is healthcare sharing ministries (HCSMs). These are cost-sharing health plans in which members – who typically share ethical or religious beliefs – make monthly payments to cover the expenses of other members including themselves.
HCSMs are less expensive than paying full out-of-pocket costs for traditional health insurance but are not health insurance companies. They do not have to comply with the consumer protections of the ACA. They also may reject or limit coverage for pre-existing health issues and often limit how much you will be reimbursed for your medical costs.
Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living" book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization's official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.
Unfortunately, Medicare does not provide family coverage to younger spouses or dependent children when the older spouse qualifies for Medicare. No one is eligible for Medicare benefits before age 65 unless they are eligible due to a specified disability. With that said, here are some options for obtaining health coverage for your spouse.
Affordable Care Act: One option is to purchase an individual health insurance policy for your spouse through the Affordable Care Act (ACA) Health Insurance Marketplace. The Marketplace offers comprehensive health coverage and will not deny coverage or charge extra for preexisting health conditions.
The American Rescue Plan and Inflation Reduction Act enhanced premium subsidies for Marketplace plans through 2025. If your income falls below 400% of the poverty level after you retire – below $73,240 for a couple or $54,360 for a single person in 2023 – your spouse will be eligible for a tax credit that will reduce the amount you pay for the policy. The Marketplace also ensures that households with incomes above 400% of the poverty level will not have to pay more than 8.5% of their income for a benchmark policy.
To calculate your estimated subsidy, search online for a "health insurance marketplace calculator" and enter your family's information. To shop for Marketplace plans in your state, visit HealthCare.gov or call 800-318-2596. If you want extra help, you can search the online directory at HealthCare.gov/find-assistance to locate an agent or broker in your area.
COBRA: Another option is the Consolidated Omnibus Budget Reconciliation Act (COBRA) which is a federal law that would allow your spouse to remain with your employer's insurance plan for at least 18 months after you make the transition to Medicare. If the older spouse becomes eligible for Medicare and leaves their employer within 18 months of eligibility, COBRA coverage can continue for up to a maximum of 36 months. Not every employer plan is COBRA eligible. Contact your employer's plan administrator to find out if COBRA applies to your plan.
You should be aware that COBRA can be expensive because it requires you to pay the full monthly premium yourselves. But, if you have already met or nearly met your employer's plan deductible or out-of-pocket maximum for the year and do not want your spouse to start over with a new plan, it may make financial sense to keep your spouse's current coverage under COBRA. Even if your spouse is eligible to elect COBRA coverage, you should compare premiums from the Marketplace and those through a private insurer to see what is most affordable.
Short-Term Health Insurance: If you cannot find an affordable Marketplace plan and COBRA is too expensive, the next option is short-term health insurance. These plans are more affordable no-frills plans that provide coverage for up to 12 months and may be renewed for up to three years in some states. Be aware that short-term plans are not available in every state and do not comply with the ACA protections. They can deny sick people coverage, refuse to cover preexisting conditions and can exclude coverage essentials like prescription drugs.
Healthcare Sharing Ministries: One other coverage option you should know about is healthcare sharing ministries (HCSMs). These are cost-sharing health plans in which members – who typically share ethical or religious beliefs – make monthly payments to cover the expenses of other members including themselves.
HCSMs are less expensive than paying full out-of-pocket costs for traditional health insurance but are not health insurance companies. They do not have to comply with the consumer protections of the ACA. They also may reject or limit coverage for pre-existing health issues and often limit how much you will be reimbursed for your medical costs.
Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living" book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization's official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.
Published June 16, 2023
