If you buy your own health insurance through the Marketplace and you are approaching 65, you are about to hit one of the biggest coverage transitions of your life. The rules are different from a job-based plan, and a few missteps can mean a gap in coverage, a surprise tax bill or a lifetime penalty. This guide covers the main points, citing HealthCare.gov and Medicare.gov.
- You can keep a Marketplace plan with Medicare, but you pay full price for it, per HealthCare.gov.
- Marketplace coverage does not end automatically when Medicare starts. You end it through your Marketplace application.
- Once Medicare Part A starts, you generally lose premium tax credits and other Marketplace savings.
Why your subsidy stops
HealthCare.gov explains that once Medicare Part A (hospital insurance) or a Medicare Advantage plan starts, you no longer qualify for the premium tax credit or other savings on Marketplace coverage. CMS notes that most people qualify for premium-free Part A at 65, so most lose Marketplace savings at that point. If you keep receiving the subsidy after Medicare starts, you may need to repay it when you file your federal taxes. Marketplace coverage also does not lower your out-of-pocket costs under Medicare.
How to end Marketplace coverage without a gap
- Know your Medicare start date. Your Initial Enrollment Period begins 3 months before the month you turn 65, includes your birthday month and ends 3 months after, per Medicare.gov.
- Update your Marketplace application. You can report a Medicare start date up to 3 months ahead. If Medicare starts May 1, you can update as early as February 1, and the Marketplace plan ends April 30.
- Confirm Part B too. If you have Part A but not yet Part B, HealthCare.gov suggests signing up for Part B as soon as possible and ending Marketplace coverage once Part B starts, so you have no gap.
Ending is not automatic, and retroactive end dates are limited, so do it before Medicare begins. See our Turning 65 guide and the new-to-Medicare checklist.
Moving from the Marketplace to Medicare?
Tell us your birthday and your current plan. We will lay out the timeline so nothing overlaps or lapses. Free, no pressure.
Plan my transitionThe Part B trap: Marketplace coverage is not job-based coverage
This is where people get hurt. Medicare.gov says you may owe a Part B late enrollment penalty of 10% for each full 12-month period you could have had Part B but did not sign up, and the penalty can last as long as you have Part B. A Special Enrollment Period avoids the penalty, but the employer-based version applies to coverage from current employment through you or a spouse. Marketplace coverage is not that kind of coverage. Do not assume keeping a Marketplace plan lets you delay Part B without consequences.
Your options at 65
- Enroll in Original Medicare (Parts A and B), usually with a drug plan and often a Medicare Supplement.
- Choose a Medicare Advantage plan that bundles coverage.
- Keep the Marketplace plan too, at full price, only if there is a specific reason, since it generally does not add to Medicare coverage.
Our guides on Parts A, B, C and D and Advantage vs. Medigap help you compare. If you are still working with employer coverage at 65, the rules differ again.
A timeline to follow
- About 4 to 6 months before 65: list your doctors and prescriptions and decide which Medicare path you want.
- 3 months before: your Initial Enrollment Period opens, and you can report a Medicare start date to the Marketplace.
- Before Medicare starts: end Marketplace coverage so it stops the day before.
- After: review your first Medicare statements and your tax paperwork for any subsidy to reconcile.
Common mistakes to avoid
- Assuming the Marketplace plan will cancel itself. It will not, and you may keep paying for coverage you no longer need.
- Keeping the subsidy after Medicare starts. You may have to repay it when you file taxes.
- Letting Part B wait. A gap between Marketplace coverage ending and Part B starting can leave you without coverage, and a late Part B can carry a lifetime penalty.
- Waiting until the last month. You can report a Medicare start date up to 3 months early, so there is no reason to scramble.
Availability and rules vary by state
Medicare rules are federal, but plans, prices and Marketplace rules vary by state and county. Fill out our short form or call (571) 354-0146 for what is available at your address. Each state’s insurance regulator can verify an agent’s license and answer consumer questions:
- Virginia: Virginia Bureau of Insurance
- Maryland: Maryland Insurance Administration
- North Carolina: North Carolina Department of Insurance
- South Carolina: South Carolina Department of Insurance
- Georgia: Georgia Office of Insurance and Safety Fire Commissioner
- Alabama: Alabama Department of Insurance
- Louisiana: Louisiana Department of Insurance
- Texas: Texas Department of Insurance
- Michigan: Michigan Department of Insurance and Financial Services
- Indiana: Indiana Department of Insurance
- West Virginia: West Virginia Offices of the Insurance Commissioner
How Honorbrook helps
We are an independent agency. We can walk through your Medicare options and the timing against your Marketplace plan. We do not offer every plan available in your area, so Medicare.gov remains the place to see all options.
This article is general information, not insurance, tax or legal advice. Rules and eligibility vary, and a licensed agent can confirm what applies to you.