Healthcare Coverage and Death of a Spouse
Today’s video addresses the sad topic of how death of a spouse can affect one’s healthcare coverage. Like so many other complex healthcare issues in the U.S., how death of a spouse can affect your coverage depends on the coverage you have. It is always best to have a sense of what your options might be should your spouse predecease you. Should that happen, the objective is to carefully weigh options and work to avoid a gap in coverage. Please note that most coverage is Affordable Care Act-compliant and thus no longer medically underwritten but in spite of this advance, there are still numerous issues to weigh. We’ve outlined below the major categories of coverage and issues to keep in mind.
Group Coverage through an Employer or Union
If you are covered as a dependent with group coverage and your spouse dies, you are no longer eligible for that coverage and should be offered COBRA, the federal law temporarily extending group coverage, or mini-COBRA, state laws extending group coverage to a group of fewer than 20 employees. If you are under 65, you should consider the pros and cons of electing COBRA versus going to the individual market for coverage. Under federal law, COBRA coverage for a dependent can last up to 36 months. With mini-COBRA, the length COBRA coverage remains in effect is based on your state of residence.
In weighing these options, cost is certainly a consideration, especially if one might qualify for a premium tax credit through the Marketplace. But there are many factors to weigh, does the surviving spouse have coverage or can possibly obtain coverage through employment or future employment? If the individual market options are attractive, buying individual coverage potentially avoids a subsequent transition. Conversely, if one knows nothing about the individual market, COBRA may be an attractive option to postpone dealing with that transition.
Group of Two
Under the Affordable Care Act, a group can be as small as one owner and one employee covered by the small group plan. Should the owner die, however, there is no COBRA for the surviving spouse, any other dependents or the employee because the business is no longer considered eligible to be a group. Most often, the surviving spouse, other dependents and employee should transition to the individual market. In a situation where the spouse can run the business, then the surviving spouse would become the subscriber and the small group policy should continue. If the surviving spouse steps in to wind-down a business, our advice would be to plan ahead for a transition to the individual market because there is no COBRA when there is no business entity.
Working beyond Age 65
If you are on active group coverage beyond age 65 as a dependent and your spouse dies, you need to transition to Medicare and related products as soon as possible. You will be offered COBRA but you should not elect it except in rare circumstances because COBRA is considered secondary (pays after Medicare Part A and Medicare Part B) if you are Medicare-eligible.
Medicare enrollment is individual. As a result, whether you are on original Medicare or an Advantage Plan, death of a spouse will not affect your coverage. If both spouses are on Medicare supplement plans together, however, then the death needs to be reported to the insurer so that the premium is reduced to a single amount.
Retiree Medical and Survivor Benefits
Some companies still offer retiree medical benefits to those 65 and older and on Medicare. Should the subscriber die, the surviving spouse needs to know if the Plan has survivor benefits. This is not a given, so if you have retiree medical benefits, you should determine whether the Plan has survivor benefits. It is not unusual for companies to have changed policies over the years so there can be various classes of retiree medical with different, and usually less rich medical benefits over time.
Because individual coverage is state-based and either on or off Exchange, there are probably many different approaches to this issue depending on where you live. Remember, individual coverage is not medically underwritten, so regardless of any pre-existing conditions the surviving spouse will not lose the right to purchase coverage if the policyholder dies. That being said, there may be administrative issues if the decedent was the subscriber. It is best to be in contact with your insurance company and the Exchange, either healthcare.gov or your state-based Exchange, to understand any implications.
Another factor to consider is if you are receiving a premium tax credit and the deceased spouse was earning income. In this case the death could reduce your premium contribution or, if household income goes down enough, result in the loss of eligibility for the plan. Should this happen in the states that expanded Medicaid, the death might lead you to be eligible for Medicaid rather than subsidized individual coverage in your state.
If your family is low income and already receiving Medicaid benefits when a spouse dies, then the death of a spouse should not affect your Medicaid benefits. It is always wise to report a death as soon as possible.
There are many issues to attend to when a spouse passes away and healthcare coverage is one of the most important. Please watch the video and share this information with others. Thank you.