There have been many questions arising with regards to the health care subsidies offered to people below a certain income bracket. It seems like there is no one answer—with literally hundreds of scenarios it‘s nearly impossible to have a set answer for each one.
Additionally, since there are so many questions and so much confusion, many people are under the assumption that they simply will not be able to purchase health insurance. Either they believe their cost will be too high, they do not think they will qualify for any type of subsidy, or they are unsure about their options. Many people are simply resigned to paying the penalty for being uninsured and hope they don’t get sick enough to need medical care.
I Receive Medicare but My Wife Doesn’t
An example of this is a recent question we had from one of our clients, where the husband is a Medicare recipient but his wife is not old enough to qualify for Medicare. Most of the information regarding health care on the exchanges, and what subsidies may be available, deals with a younger married couple.
Furthermore, the assumption is that both of them will need to purchase an insurance plan. So what happens when one spouse is covered by Medicare but the other is not?
Here are the factors that will be taken into account to calculate a subsidy in cases like this:
- A person receiving Medicare (who is not also working) counts as a household member, but there is no income to add in when calculating the subsidy amount. Therefore, the subsidy could definitely work in their favor if the spouse is working and is not offered group insurance. However, if both of them are working, their combined incomes may be over the limit for qualifying for a premium subsidy.
- The couple is required to file a joint tax return or neither of them will receive a subsidy for their health care, regardless of their income level or whether one is covered by Medicare.
- If the non-Medicare eligible spouse has an employer-sponsored health plan that offers coverage to the spouse, as long as the premium for the employee only is not over 9.5 percent of the family modified adjusted gross income (MAGI), it does not matter how unaffordable the premiums are for the other party. There is no subsidy available.
A True-Life Scenario
We recently experienced this exact situation, where a woman was calling about her husband’s options for a Medigap plan. They were already pinching pennies to be able to afford his Medicare premiums, and when speaking with Genice (one of our Personal Advisors), they divulged that she simply could not afford to pay the premiums for health insurance on herself. This woman and her husband had decided, based on everything they had heard, that the premiums for her would be too high.
Genice was able to discuss this couple’s financial situation as well as their medical needs (which a navigator on the insurance exchanges is prohibited from doing) and get a comprehensive look at their insurance options. Their household income, filing a joint tax return, was $24,000.
In this case, Genice was not only able to provide a Medigap plan for the husband to supplement his Medicare coverage but was also able to find a plan for his wife. Since their household size was two (even though the husband was not purchasing an individual policy), their income was low enough that the wife was able to qualify for a large enough premium subsidy to make her health insurance quite affordable.
How Do I Know My Options?
I have written a lot about how important it is to talk to an insurance professional before making any health insurance decision, and this is a perfect example of why it is so important. If you do not talk to a professional and instead do your own research and are relying heavily on what you hear, you may be under the impression that health insurance is simply not an option for you. Confused about health insurance or the corresponding terminology? Learn more here.
If you purchase a health plan on either the federal or state health exchange, you will not be able to talk with a licensed agent or broker, but will instead receive the services of a navigator. These people, in our judgment, are woefully undertrained, and they are prohibited from making recommendations based on your budget and lifestyle. They are only allowed to present you with the plans available and let you make your choice. If you are concerned or wondering if you are on the right plan for sure, check out whether it may be a good idea to switch plans here.
No matter how simple you think your health care needs are, you should NOT shop on any of the health exchanges. There are so many different things to be taken into account when purchasing health insurance that there are literally thousands of scenarios. If you do not have the opportunity to talk with an agent or broker and discuss everything that needs to be taken into consideration, you may encounter serious issues—both financially and health-wise.
Wiley Long is President of HSA for America, and a passionate advocate for consumer-based solutions that will improve price transparency and lower health insurance and medical costs for people purchasing individual and family health insurance plans.