Buying gap insurance before Medicare begins has become a priority for many consumers. This gap usually takes place when you or a spouse retires early, or if you are unexpectedly laid off from your job. Typically, you only need medical or supplemental benefits for a few years, but often finding a low-cost plan may be difficult. The cause may be a result of a health problem in the past, or availability in your area if you missed Open Enrollment for Marketplace plans. Short-terms are often available, although the maximum period for benefits may only be 360 days.
If you recently lost coverage, your plan was terminated, or you moved to a different service area, you are probably eligible for an SEP (Special Enrollment Period) that allows you to qualify for quality coverage and choose from all available plans. There are also many additional exceptions that will allow you to buy a policy any time of the year. Several examples of qualifying events include getting married, moving to a different service area, losing coverage through a divorce, reaching age 26, and losing Medicare eligibility.
If you are in excellent health with no conditions or medications, or if you have limited minor conditions, a high-deductible plan may be the least expensive option. This particular type of coverage is ideal for the time frame needed and there are many large dependable companies that will offer a policy. Although there may be several questions to answer, they are not medically-related (Marketplace policies) and a federal subsidy may save you thousands of dollars.
Bronze-tier contracts are the least expensive metal plan for applicants that have reached age 30. Silver-tier plans may offer substantially lower deductibles and out-of-pocket expenses if cost-sharing is offered. If household income requirements are met, copays, deductibles, and maximum out-of-pocket expenses can substantially reduce.
Less Than Six Months To Medicare?
If your Medicare benefits begin in less than six months, then it’s possible that a temporary policy will be the perfect solution. Although pre-existing conditions are excluded and a deductible (that you select) must be met before most benefits are paid, the cost is roughly half of other health insurance plans (without a subsidy). You can pay monthly with most carriers and cancel benefits at any time. Unlike Marketplace and some Medicare plans, preventative expenses are not 100% covered.
The major risk is that you would have a very large major medical claim that involved expensive medications. This scenario would be very expensive, and especially if you have to attempt to renew the plan. Most policies in this category will let you keep your benefits for up to a year, but you may have to “re-qualify” to continue coverage. Selected states can offer 24-36 months of continuous coverage. Temporary plans are often best utilized when the OE deadline is missed.
More Than Six Months To Medicare
When Medicare eligibility is more than six months away, then a private individual or family policy will be the best solution. Since you are the owner of your plan, you can keep benefits in force and avoid any gaps in coverage. Once approved, if your health were to change, you’ll still be able to retain your policy, and keep it until your new benefits begin. NOTE: Marketplace plans are guaranteed to be approved during the OE Period.
However, since it will be difficult to change companies outside of Open Enrollment, hopefully, any rate increases will be nominal. If premiums did start to unexpectedly rise, changing carriers would still be possible under most circumstances. If you only needed secondary healthcare benefits, then there are specific contracts set up for that purpose. AFLAC benefits, for example, may be offered through an employer. AFLAC Senior benefits are offered in multiple states.
More Than 18 Months To Medicare
If the interruption of coverage is approaching or longer than a few years, a more comprehensive policy will be a safer option, especially if you are treated for any conditions. regardless where you live, Exchange (Marketplace) coverage is offered in multiple Tiers. The Bronze-tier plans are ideal if you only want major medical catastrophic benefits. If you qualify for a subsidy, often Silver-tier options are the most cost-effective. High-income households with serious medical conditions should consider Gold and Platinum-tier contracts.
Since a private Exchange plan is not medically underwritten, it is not possible that the quoted premium will actually rise, due to admitted treatment and/or conditions. Changes in the original projected household income can result in a year-end tax refund or tax bill. Multiple carriers are typically offered in your county of residence, providing different carrier and policy options.
Before The Affordable Care Act
Prior to 2014, increases were slight (minor issues such as allergies or high blood pressure) or rather steep if more than one ailment was being treated. A 50%-200% price hike was not unusual, especially with persons older than age 50. And it was also possible that the insurer could simply decline the application.
When that occurred, there were still a few viable options. The “Risk Pools” provided by each state offered medical coverage for persons that had serious health problems and that had been denied by two insurance companies. If you had been declined once, there was a good chance you would be declined a second time. If your income fell below the Federal Poverty Level, you may have been eligible for Medicaid. That has not changed.
After The Affordable Care Act
Open Enrollment from State Health Exchanges began in October (2013) and policies were issued effective January of 2014. Now, regardless of what pre-existing conditions you may have, your application can not be declined. A special federal subsidy will help you pay the cost of your policy if your income meets “Federal Poverty Level” guidelines. As we have discussed quite often on our website, the subsidies (instant tax-credits) can reduce the premium from $1,200 per month to less than $100 per month for a larger family with moderately low income.
And of course, there may be COBRA availability, if you are leaving an employer. Under certain conditions, your group health (and dental and vision) benefits from your employer will extend for 18 months, followed by HIPAA plan options. Premiums will be quite high since pre-existing conditions will be covered.
Naturally, this option would not be a good choice for persons in excellent health. Also, if you are currently under doctor’s care for a recent surgery, you should not relinquish your COBRA plan. Once treatment is completed and you are recovered, the timing would be much better, and you can consider a suitable gap policy.
And finally, if you’re willing to go back to work, you may be able to find an employer willing to hire you part-time, and possibly share in the cost of your healthcare benefits. While this is unusual, there are some larger corporations that might be willing to help. NOTE: When you are hired as a new employee, you are typically immediately eligible for group benefits.
In a perfect world, you would not have a gap from your current medical coverage to when Medicare begins. But avoiding this situation is often not possible so, alternative policies have to be utilized. We’ll help you find the most affordable options.