Summary: If you have end-stage renal disease (ESRD, which is kidney failure), you may be able to get an Obamacare plan instead of Medicare.

You might be eligible for Medicare in some cases if you have a disability. But just because you can get Medicare coverage, does that mean you have to take it instead of a major medical health plan under Obamacare? That’s what this article is all about.

Some people qualify for Medicare before they turn 65, because they receive disability benefits through Social Security or the Railroad Retirement Board.

Obamacare vs. Medicare: comparing disability coverage

Obamacare refers to the Affordable Care Act (ACA) passed in 2010. Under Obamacare, if you have a disability – or any pre-existing health condition – health plans sold in the federal Marketplace or state exchanges can’t turn you down when you apply.  Every health plan that complies with the ACA, including those sold on the Marketplace under Obamacare, must include certain benefits, such as prescription drugs, preventive care, mental health services, outpatient care, and hospital care.

Original Medicare (Part A and Part B) generally also accepts eligible applicants regardless of disability or pre-existing condition. Part A and Part B generally cover most of the services and items that Obamacare covers, with at least one exception: prescription drugs. Health plans under Obamacare include prescription drug coverage, while Original Medicare generally doesn’t cover prescriptions you’d take at home.

Medicare Part A generally covers prescription drugs given to you as part of your hospital inpatient treatment. Medicare Part B may cover certain medications administered to you in an outpatient setting.

In a nutshell:

  • Obamacare plans typically include prescription drug coverage while Original Medicare doesn’t, in most situations.

Obamacare instead of Medicare is OK if you have ESRD

ESRD stands for end-stage renal disease: permanent kidney failure requiring regular dialysis or a kidney transplant. The disease might make you eligible for Medicare at any age. If you’re newly eligible for Medicare because you have ESRD, you don’t have to enroll in Medicare. You’re free to sign up for an Obamacare plan.

Note that you’re not automatically enrolled in Medicare if you have ESRD.

If you have Medicare coverage and have ESRD, you might be able to withdraw your Medicare application. You might then have to reimburse the government for past disability and Medicare benefits.

Obamacare vs. Medicare: comparing costs (disability or not)

There are many variables when it comes to your out-of-pocket costs, whether you’re covered by Medicare or under Obamacare. Disability generally doesn’t affect these costs.

Overall, Medicare costs you less than Obamacare when it comes to average premiums and deductibles.

eHealth studied average Obamacare (ACA) premiums for people aged 63-64. The Obamacare vs. Medicare study compares that amount with average premiums for various combinations of Medicare coverage.

ACA vs. Medicare Premiums

For example, take a look at the third column from the right in the graph above. The average total monthly premiums for someone who’s enrolled in Original Medicare (Part A and Part B) and a stand-alone Medicare Part D prescription drug plan was $167. The average premium for someone close to Medicare age (63-64) under an ACA plan was $857. (ACA plans include prescription drug coverage.)

Next, let’s look at a different Obamacare vs. Medicare cost comparison: average deductibles.[1]

Average Deductible Costs

Medicare average deductibles and premiums stack up lower than those of Obamacare.

Under Original Medicare, most people don’t pay a premium for Part A. If you’ve worked at least 40 quarters (10 years) while paying Medicare taxes, in most cases you don’t pay a Part A premium. However, most people pay a Part B premium. The amount can vary depending on your situation, but the standard Part B premium is $144.60 in 2020 (the graph above shows data from 2018). There are also deductible amounts and coinsurance or copayment amounts you may have to pay. The Part A deductible is $1,408 in 2020 (per benefit period). The Part B deductible is $198 in 2020 (per year). Read more about Medicare out-of-pocket costs.

Marketplace plans under Obamacare usually also have premiums, deductibles, copayments, and coinsurance amounts. They typically also have out-of-pocket maximum amounts. This means that after you’ve spent a certain amount on certain health-care costs, the plan generally doesn’t charge you for covered health-care services for the rest of the year. In contrast, Medicare Part A and Part B don’t have out-of-pocket maximum amounts.

In a nutshell:

  • You may not need to pay a premium for Medicare Part A.
  • Obamacare plans typically have out-of-pocket maximum amounts whereas Original Medicare plans do not.

Can I choose Obamacare instead of Medicare if I’m disabled?

Whether you can enroll in an Obamacare plan (or another major medical plan) instead of Medicare may depend on whether you qualify for premium-free Medicare Part A.

Medicare instead of Obamacare if you’re disabled and receive premium-free Medicare Part A

In most cases, you can’t choose an Obamacare plan over Medicare if you’re disabled and getting premium-free Part A. If you have premium-free Part A and you decide to drop Medicare, you can lose your SSA or RRB disability benefits. You’d even have to reimburse the government for past disability and Medicare benefits.

If you have insurance coverage through an employer’s group health plan, and you qualify for Medicare, in some cases you can be enrolled in Medicare and the group health plan at the same time. If the employer has at least 100 employees, Medicare would generally be the “secondary payer” in the coordination of benefits. This means that the employer plan would pay its share first, before the claim is sent to Medicare.

If your employer has fewer than 100 employees, Medicare is the primary payer.

In a nutshell:

  • Many people who qualify for Medicare through disability can’t replace this coverage with an Obamacare plan.

Obamacare instead of Medicare is OK if you’re disabled and you pay a premium for Medicare Part A

If you pay a premium for Medicare Part A (because you have worked for less than 10 years or 40 quarters while paying Medicare taxes), you may be able to enroll in an Obamacare plan instead of Medicare. However, be aware that if you decide to enroll in Medicare later, you might have to pay a late-enrollment fee.

In a nutshell:

  • You may be able to opt for an Obamacare plan if you don’t qualify for premium-free Medicare Part A.

If you have questions about Medicare coverage related to your disability, I am happy to help. To get started, simply click the Get Quotes button to schedule a phone call or to request a personalized email.

[1] The national average estimated deductible for people age 65 to 70 enrolled in Original Medicare who selected a Part D plan at eHealth is $1,823, a 58 percent reduction compared to the average deductible for ACA coverage for people age 63 and 64 in 2017-2018.

The Medicare deductible in this case is calculated based on 2018 amounts: the Part A deductible of $1,340 per benefit period, the Part B deductible of $183 and the average deductible of Part D plans selected by consumers at eHealth, which is $300. However, Original Medicare places no limit on the number of benefit periods.