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President Donald Trump’s health team is going after people who get Obamacare subsidies while they’re also covered by Medicare or Medicaid, or who have died.
“We’ve already saved nearly $6 billion,” Dr. Mehmet Oz, who runs the Centers for Medicare & Medicaid Services, said in an Oct. 14 release on the effort. (1)
Health and Human Services Secretary Robert F. Kennedy Jr. put it this way: “Taxpayers should not foot the bill for duplicate coverage or subsidies for people who have died.” (1)
I’ve been a CPA since 1981, and on this one I agree with them. Nobody should collect two government health subsidies at once.
But here’s what the press release doesn’t spell out, and what I’d bet is happening: some of the people flagged for Medicare overlap are likely ordinary folks who turned 65 and never canceled their Marketplace plan.
And thanks to a tax change that took effect this year, that mistake can now cost them every dollar of subsidy they received after becoming eligible for Medicare, repaid at tax time. (2)(3)
This year, CMS says it identified 189,000 people with subsidized Obamacare coverage through the federal Marketplace who also had Medicare, Medicaid or CHIP coverage, or who had died. (1)
If you or someone you love is approaching 65 with an Obamacare plan, here are 5 things to know before that bill arrives.
1. Your Marketplace plan doesn’t end when Medicare starts
This is where the trouble starts. HealthCare.gov says plainly that Marketplace coverage doesn’t end automatically when Medicare starts. You have to update your Marketplace application and end it yourself. (2)
The good news: you can report your Medicare start date up to three months early, so your Marketplace plan ends the day Medicare begins. (2)
2. Your subsidy ends when you’re eligible for Part A, not just when you enroll
According to HealthCare.gov, you can’t get savings on your Marketplace premiums or out-of-pocket costs once you’re eligible for Medicare Part A, or once your Part A or Medicare Advantage coverage starts. After that, you’d pay full price for the Marketplace plan. (2)
Medicare’s own site says something similar: once you’re eligible for premium-free Part A, you won’t qualify for help from the Marketplace to pay your premiums. (4)
3. The repayment cap is gone, so you could owe it all back
Here’s the CPA part. If you use the premium tax credit to lower your monthly premium and don’t end your Marketplace coverage, HealthCare.gov says you’ll have to pay back the premium tax credit you used when you file your federal taxes. (2)
Until recently, repayment limits capped how much many people owed. The IRS says those limits no longer apply: beginning with tax year 2026, you must repay the full amount of any excess advance payments. (3)
Say your subsidy was $700 a month and you kept the plan five months past your Medicare eligibility. That’s a hypothetical $3,500 you could owe the IRS next spring, on top of whatever else is on your return.
If you’re already facing a tax bill you can’t pay, don’t ignore it — penalties and interest can snowball.
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4. Keeping Obamacare instead of Medicare can cost you for life
Some people think, “I’ll just keep my Marketplace plan and skip Medicare.” Bad idea.
Medicare says you should sign up when you’re first eligible, even if you have individual coverage that isn’t based on current employment.
Otherwise you may owe late enrollment penalties. (4) Your Initial Enrollment Period usually lasts seven months, starting three months before you turn 65 and ending three months after. (2)
For Part B, the penalty is an extra 10% for each full 12-month period you could have signed up but didn’t, and Medicare says penalties like this are usually charged for as long as you have that coverage — for most people, a lifetime penalty.
Medicare’s example: wait two full years, and you pay a 20% penalty on top of the standard 2026 premium of $202.90 a month. (5)
That’s $40.58 a month at 2026 rates, and the penalty rises as the premium does, potentially for the rest of your life.
Medicare timing, taxes and Social Security all collide around 65, and mistakes compound.
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5. If CMS contacts you, you have 30 days
CMS says people flagged for duplicate coverage are contacted and given 30 days to dispute it. If they don’t, CMS ends the subsidy for their Obamacare plan, though CMS says people can still appeal afterward. (1)
The same goes for someone who has died: CMS contacts the person or the estate and gives 30 days to dispute the record. (1) If you’re handling a late parent’s affairs, open the mail.
And one more protection worth knowing: Medicare says it’s against the law for someone who knows you have Medicare to sell you a Marketplace plan. (4)
My honest take
I’m with Oz and Kennedy on the principle. Taxpayers shouldn’t pay twice for the same person’s health insurance.
But my read is that the people most likely to get hurt by this crackdown aren’t scammers. They’re new retirees who signed up for Medicare, assumed the old plan would shut itself off and never thought about it again.
Mark the date you turn 65 on the calendar, call the Marketplace before Medicare starts, and keep the confirmation. It’s a quick chore that could save you thousands.
Sources: 1. Centers for Medicare & Medicaid Services; 2. HealthCare.gov; 3. IRS; 4. Medicare.gov; 5. Medicare.gov
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