Senior Health Insurance Options

In the United States, most adults become eligible for Medicare health insurance when they turn 65. The initial enrollment period starts three months before your 65th birthday and lasts three months after you reach the age of 65, which gives you time to compare plans and learn more about the different types of coverage.

Although most older adults rely on Medicare to cover some of their medical expenses, several other types of senior health insurance are available, including COBRA coverage, benefits provided by the Department of Veterans Affairs and short-term plans designed to fill gaps in coverage . Keep reading to learn more about these senior health care options. 

Short-Term Health Insurance

If you expect to have a short gap between when your current senior health insurance coverage ends and your new coverage begins, you may want to consider a short-term insurance plan. Short-term plans are designed for specific situations. These might include: 

• You won't have another form of coverage for several months because you missed the enrollment window. 
• You're transitioning from one stage of life to another. 
• You don't qualify for employer-sponsored coverage until an initial waiting period ends. 

Until 2019, you could only enroll in a short-term plan for three months with the option to renew for one year. Now many states allow you to sign up for 364 days with the option to renew for up to two years. 

Open enrollment for plans available under the Affordable Care Act typically begins on November 1 and runs until December 15. If you don't sign up during this enrollment window, you may qualify for a special enrollment period, but only if you meet certain conditions. Special enrollment may be available to you if any of the following apply: 

• You moved and no longer qualify for your previous plan. 
• You adopted a child. 
• You got married. 
• You lost your health insurance coverage. 

If you missed the enrollment window and don't qualify for a special enrollment period, then a short-term insurance plan can ensure you have coverage in place until ACA open enrollment begins again. Short-term insurance is also an option if you're waiting for your ACA coverage to begin. 

Although Medicare coverage typically begins at 65, there's no guarantee you'll be able to maintain your private senior health insurance coverage until you're old enough to enroll. For example, if you lose your job at age 64, you might need a short-term insurance plan to cover you until you qualify for Medicare. Short-term insurance could also give you the coverage you need if you lose a job and it takes several months to find another one. 

Short-term coverage could also be a good option if you make too much money to qualify for ACA subsidies but not enough money to pay the full price of a marketplace insurance plan. Because short-term plans cover fewer services and may have annual limits, the premiums are often much lower, making them more affordable if you've been priced out of the ACA marketplace. 

Covered Services

What's covered under your short-term plan depends on which insurer you choose. While some plans cover preventive care, others don't. Your plan may or may not cover prescription medications. If you want to keep your current doctors, make sure they're considered in-network before you purchase a plan. 

Availability of Short-Term Coverage

Depending on where you live, short-term health insurance may not be available in your state.  

The following states don't allow insurance companies to sell short-term health plans: 

• California 
• New York 
• Massachusetts 
• New Jersey 
• Hawaii 

Other states have restrictions on how long you can remain on a short-term insurance plan. In Illinois and Colorado, you can only enroll for six months; Maryland, Washington, Vermont, Delaware, New Mexico and the District of Columbia limit short-term coverage to three months with no renewal option.¹ 

It's also important to know that because some states regulate short-term insurance plans so heavily, many insurers choose not to offer any plans in those states. For example, short-term health insurance is technically permitted in New Mexico; but in 2020, no insurers are offering this type of coverage to New Mexico residents.² 

Eligibility for Short-Term Coverage 

Under the Affordable Care Act, insurers aren't allowed to deny coverage or charge exorbitant premiums if you have any preexisting conditions.³ Because short-term insurance plans aren't required to meet the ACA requirements, insurers are allowed to ask applicants to complete medical questionnaires.⁴ If you have heart disease, high blood pressure, kidney disease or another medical condition, the insurer may deny your application. Even if the insurer agrees to provide coverage, you may have to pay a costly premium. 

Advantages of Short-Term Senior Health Insurance

Short-term health coverage has several advantages to consider, including the following: 

• Short-term plans cover temporary gaps in coverage, ensuring that you won't have to pay 100% of your medical expenses out of pocket should you develop a serious medical condition after your regular coverage ends. 
• Insurance carriers offer a wide variety of short-term plans to suit your budget and coverage needs. 
• A short-term plan may cover you for as long as 12 months; depending on where you live, you may also be able to renew for up to two more years. 
• You can usually cancel your short-term insurance coverage without paying a penalty. 
• Short-term insurance premiums are usually lower than the premiums charged for traditional health insurance.⁵ 

Disadvantages of Short-Term Health Insurance

Although short-term insurance plans can provide coverage in a pinch, they do have some drawbacks. 

• Short-term plans aren't required to comply with every provision of the ACA, which means they may not cover some services that an ACA-compliant plan would cover. 
• You may have unexpected out-of-pocket costs. 
• Your short-term plan may have a high deductible. 
• Some insurance companies won't provide coverage unless you complete a medical questionnaire, which can make it difficult to obtain temporary health insurance if you have any chronic medical conditions.⁶ 
• Many plans provide no coverage for preexisting conditions. 
• You may have an annual benefit limit. 

Purchasing Short-Term Insurance 

Short-term plans aren't available via the ACA marketplace. If you're interested in a short-term plan to fill a temporary gap in coverage, first make sure this type of plan is available in your state. Then contact several major insurance companies to inquire about plan availability, and ask for brochures or other documents to help you compare plans based on price, availability and covered services. If you'd feel more comfortable having a professional help you choose a short-term insurance plan, contact a broker in your area. Health insurance brokers typically represent several companies, so you should be able to get several quotes to compare. 

COBRA

The Consolidated Omnibus Budget Reconciliation Act, more commonly known as COBRA, gives employees and their spouses the right to keep their group health coverage for a limited amount of time if a qualifying event occurs.⁷ The following are some of the qualifying events that may make you eligible for COBRA coverage: 

• You lost your job. 
• You got divorced and your spouse was the covered employee. 
• The covered employee (your spouse) passed away.⁸ 
• The covered employee became eligible for Medicare. 

How long COBRA coverage lasts depends on what qualifying event has occurred. If you were the covered employee and lost your job, COBRA coverage lasts for up to 18 months.⁹ If your spouse was the covered employee and passed away or became eligible for Medicare, or if you were divorced or legally separated, COBRA coverage lasts for up to 36 months.¹⁰ COBRA begins as soon as the qualifying event occurs to prevent gaps in coverage. 

Not all employers are required to offer this type of coverage. The law only applies to employers with 20 or more employees, so if you work for a small business, you may have to look for another insurance option if you experience a qualifying event.¹¹ Additionally, if you elect to remain on your employer's health plan, you will most likely have to pay the full premium. Your employer is also permitted to charge an administrative fee to cover the costs of keeping you enrolled. Therefore, you may have to pay as much as 102% of the full premium to continue your coverage.¹² 

COBRA and Medicare

If you're turning 65 in the near future, it's important to coordinate your COBRA coverage with your impending Medicare coverage. COBRA typically ends when you become eligible for Medicare, so it's wise to apply for Medicare as soon as your enrollment period begins.  

Remember, your Medicare Initial Enrollment Period (IEP) doesn't start when you turn 65; it starts three months before your 65th birthday.¹³ If you're concerned about a potential coverage gap, applying as soon as you're eligible can help to ensure that your Medicare coverage is in place when your COBRA coverage ends. 

HIPAA (Title 1)

The Health Insurance Portability and Accountability Act (HIPAA), enacted in 1996, has several purposes: 

• Requires hospitals, insurance companies and other organizations to preserve confidentiality when handling protected health information 
• Standardizes certain billing procedures related to electronic transactions 
• Reduces waste and fraud in the healthcare industry 
• Allows American workers to transfer or continue health coverage if they lose their jobs or change jobs 

Title I is relevant to the transfer and continuation of health coverage for workers who change or lose their jobs.¹⁴ It protects workers by preventing a new health plan from denying coverage based on a preexisting condition, with limited exceptions. If you leave Employer A to work for Employer B, your new employer's group health plan can refuse to cover a preexisting condition for up to 12 months, but it can't deny you coverage outright.¹⁵ 

For the purposes of HIPAA, a preexisting condition is defined as a physical or psychological condition for which you received a diagnosis, treatment, medical advice or some other care within the six months prior to enrolling in the new plan.¹⁶ If you're a late enrollee, which means you didn't sign up for the plan when you changed jobs and have to wait until the next open enrollment period begins, the preexisting condition exclusion can be applied for up to 18 months from your enrollment date.¹⁷ 

VA Benefits

If you served in the military, you may qualify for senior health insurance through the Department of Veterans Affairs. For veterans who entered active-duty status after October 16, 1981 or enlisted after September 7, 1980, you may be eligible for VA benefits if you completed at least 24 months of continuous service, or if you completed your full active-duty assignment.¹⁸ The service requirement may be waived if any of the following apply: 

• You completed your service before September 7, 1980. 
• You were discharged from the military due to a disability caused by your active-duty service or aggravated by your active-duty service. 
• You received a hardship discharge.¹⁹ 

If you served in the National Guard or Reserves, the time you spent in training doesn't count toward the minimum requirement. To qualify for VA health insurance, you must have been activated by a federal order and served the full duty period.²⁰ 

Covered Services

All veterans meeting these service requirements qualify for health care provided by the Department of Veterans Affairs. VA benefits may pay for some of the following expenses:²¹

• Preventive services (annual exams, immunizations, health education) 
• Hospitalization 
• Surgery 
• Kidney dialysis 
• Organ transplants 
• Treatment of chronic health problems 
• Diagnosis and treatment of posttraumatic stress disorder and other mental-health conditions 

VA benefits may also cover ancillary services, which are medical services used to support your treatment. Ancillary services include diagnostic tests, physical therapy, therapy to help you manage a traumatic brain injury, radiation oncology and prosthetic services.²² In some cases, non-medical services may also be covered. Examples of non-medical services include caregiver support and help paying travel expenses related to your medical care.²³ 

Some services aren't covered by VA benefits, including the following:²⁴ 

• Cosmetic surgery, unless it's deemed medically necessary to prevent or treat a medical condition 
• Gender reassignment surgery 
• Medical treatments that haven't been approved by the U.S. Food & Drug Administration, unless you're part of an approved clinical trial or you are seriously ill and have no other treatment options 

Priority Groups

Although all veterans meeting the minimum service requirements are eligible for medical care provided by the VA, the cost of your care and how long you have to wait to receive care depend on several factors, including your priority group. The VA uses priority groups to prioritize services so that the sickest veterans are treated right away. You're assigned a priority group based on your income level, disability rating, service history, Medicaid eligibility and other benefits. 

Priority group 1 is reserved for veterans with severe service-connected disabilities and recipients of the Medal of Honor. To be assigned to priority group 1, you must be a MOH recipient, have a service-connected disability that prevents you from working or have a service-connected disability that is classified as at least 50% disabling.²⁵ 

Priority group 2 is reserved for veterans with service-connected disabilities that have been classified as 30% to 30% disabling.²⁶ Priority group 3 is for Purple Heart recipients, former prisoners of war, and veterans with service-connected disabilities classified as 10% to 20% disabling.²⁷ You may also be assigned to this group if you were discharged from service due to a disability that was caused or aggravated by serving on active duty.²⁸ The remaining priority groups are for veterans with lower-level disabilities or greater access to resources than members of the first three groups. 

VA Benefits and Private Insurance

If you have private health insurance, you'll be asked to provide information about your coverage to the Department of Veterans Affairs. Should you receive VA care for a condition that isn't related to your military service, the VA will bill your private insurer for any medications, medical supplies or services provided to diagnose or treat the condition.²⁹ If your private insurance company covers some or all of the services, you may not owe as much of a co-payment to the VA. 

Financial Help and Resource

Navigating the many senior health insurance options on the market can be confusing, but several resources are available to help you make sense of it all. State Health Assistance Programs (SHIPs) help older adults understand the ins and outs of Medicare, including coverage details, how to get help with out-of-pocket costs, eligibility criteria and coordinating Medicare coverage with your VA benefits or private insurance plan.³⁰ 

ACA Resources

If you plan to enroll in an ACA marketplace plan, you may qualify for a subsidy based on your income, household size and cost of living in your area.³¹ The subsidy comes in the form of a premium tax credit that can be used to reduce the monthly cost of your premium. 

As of 2020, 13 states operate their own exchanges, so you'll visit your state-specific website to learn more about coverage options and costs. 

• Covered California³² 
• Connect for Health Colorado³³ 
• Access Health CT (Connecticut)³⁴ 
• DC Health Link (District of Columbia)³⁵ 
• Your Health Idaho³⁶ 
• Maryland Health Connection³⁷ 
• Health Connector (Massachusetts)³⁸ 
• MNsure (Minnesota)³⁹ 
• Nevada Health Link⁴⁰ 
• New York State of Health⁴¹ 
• Health Source RI (Rhode Island)⁴² 
• Vermont Health Connect⁴³ 
• Washington Healthplanfinder⁴⁴ 

If your state doesn't have its own marketplace, visit Healthcare.gov for more information about ACA coverage.⁴⁵ 

Financial Assistance with Medical Expenses

Even with senior health insurance, medical care can be costly, especially if you have a high-deductible plan or a plan with high co-pays and coinsurance amounts. The following organizations provide financial assistance to make it easier to afford medical care. 

• HealthWell Foundation: Helps with premiums, deductibles, co-pays and other out-of-pocket expenses⁴⁶ 
• The Assistance Fund: Offers help with co-pays and health insurance premiums⁴⁷ 
• CancerCare: Covers some costs related to cancer treatment⁴⁸ 
• Patient Access Network: Provides funds to help people defray the cost of their prescription medications⁴⁹