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Health 411: Will Medicare cover wife when husband retires?

If the retiree's spouse is under 65, coverage is available through COBRA, Cal-COBRA, a HIPAA policy or, after 2014, possibly a state-based insurance market.

March 22, 2012|By Lisa Zamosky, Special to the Los Angeles Times

My wife does not work and is covered by my employer's health insurance plan. I am 60, she is 53. If I retire in five or seven years and go on Medicare, what does that mean for my wife? At most, she will be only 60. Do we have to purchase private insurance (which I suspect will be very expensive)? Or is there some kind of Medicare coverage for dependent spouses?

Unfortunately for you and for millions of other couples in your position, Medicare does not provide dependent coverage.

"We see this a lot," says Ilene Stein, federal policy director with the Medicare Rights Center in New York City. "In some cases, spouses aren't able to retire because they need to retain coverage for their dependents."

But by the time you switch to Medicare, your wife could have a few options for maintaining health insurance on her own.

Although rare these days, it's worth finding out whether your employer offers retiree medical benefits that cover dependents.

If not, there are other alternatives. If you work for a firm with more than 20 employees, once you make the switch to Medicare and your work-based plan is terminated, your wife will be eligible for COBRA coverage, says Sam Smith, president of Genesis Financial, a Los Angeles-based benefit consulting firm.

Under the federal COBRA program, your wife would have 18 months of continued coverage. And if you live in California, she'll be able to extend COBRA for an additional 18 months under the Cal-COBRA program. (If your employer has fewer than 20 employees, Cal-COBRA will be her only source for extending your work-based coverage.)

You mentioned being concerned about insurance prices, and with good reason — COBRA is expensive. You'll have to pay the entire cost of the plan's premium (meaning both your portion and your employer's), plus a 2% administrative fee for federal COBRA and 10% for Cal-COBRA. (In other states with COBRA continuation programs, the fee can be as high as 15%.)

Even with a total of 36 months of COBRA coverage, your wife's benefits will run out by the time she's 63 — two years before she'll be old enough to qualify for Medicare. But at that point, the federal Health Insurance Portability and Accountability Act (better known as HIPAA) guarantees that she'll be able to purchase a health plan on the private insurance market.

"If you get to the end of COBRA, you then have a guaranteed issue HIPAA policy available to you," Smith says. "That's where she goes for the next two years."

The availability of HIPAA plans vary by state — in California, any carrier that sells individual policies must offer its two most popular plans to people who have used up their COBRA eligibility. But no matter where you live, you're guaranteed coverage as long as you've exhausted your COBRA benefits. In some states, insurers are permitted to consider the condition of your health when determining how much they'll charge. In California, HIPAA plans are typically priced about 50% higher than standard plans, but applicants will not be questioned about their health, Smith says.

Check with your state's department of insurance to learn the rules where you live by going to http://www.naic.org/state_web_map.htm.

Another option for your wife may be to purchase a health plan on one of the state-based insurance marketplaces slated to be up and running by 2014 as part of the Patient Protection and Affordable Care Act. Depending on your income, your wife may also be eligible for financial help from the federal government to cover the cost of this insurance.

The Kaiser Family Foundation offers an online health reform subsidy calculator for anyone interested in learning how much financial help they might be eligible for in 2014. You can try it at healthreform.kff.org/SubsidyCalculator.aspx.

However, whether this last option becomes available depends on the outcome of a case before the Supreme Court. In the case, 26 states are challenging a provision of the law that requires all U.S. citizens to purchase health insurance or face a financial penalty. This mandate is closely tied to another part of the law that requires insurers to guarantee coverage to everyone who applies for a health plan.

The Supreme Court will hold three days of hearings beginning March 26, and a decision is expected by the end of June. If the justices rule that the mandate is unconstitutional, it's unclear how the law's implementation would proceed — or whether it would survive at all.

Both Smith and Stein agree that, even without the mandate, a guarantee of access to health insurance is likely to remain in place.

Zamosky has been writing about how to access and pay for healthcare for more than 10 years.

Got a healthcare dilemma? Email health411@latimes.com or write to Health 411, Los Angeles Times Health, 202 W. 1st St., Los Angeles, CA 90012.

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