ACA Marketplace plans and Medicare serve two completely different populations, and the rules about combining them are strict. People who are enrolled in a Marketplace plan and become eligible for Medicare at 65 face a mandatory transition: ACA premium tax credits (PTCs) are not allowed after Medicare eligibility begins under 26 U.S.C. Section 36B and IRS regulations. Continuing your Marketplace plan after age 65 without enrolling in Medicare does not disqualify you from coverage itself, but it does disqualify you from the subsidy. For most people, the full unsubsidized Marketplace premium runs $500 to $900 per month for a 65-year-old in 2026, compared to $202.90 per month for Medicare Part B plus whatever plan supplement you choose. Ignoring this transition is among the most expensive mistakes a 65-year-old can make. The 7-month Medicare Initial Enrollment Period (IEP) is your structured exit from the Marketplace and entry into Medicare, and the clock starts 3 months before your 65th birthday month regardless of whether you take action.
Three facts define this transition in 2026. First, Medicare eligibility begins the first day of your birthday month (or the month before, if born on the 1st). Second, premium tax credits under the ACA stop on that same date by law. Third, the Part B late enrollment penalty accumulates at 10% per year for every 12-month period you delay outside a valid qualifying exception, and it lasts your entire lifetime. The only valid exception: you (or a spouse) have active employer group coverage from a current employer with 20 or more employees. COBRA, retiree health coverage, and Marketplace plans do not count as exceptions for the Part B delay rule. Most people turning 65 in 2026 should take the following action sequence: cancel their Marketplace plan effective the last day of the month before their birthday month, enroll in Medicare Parts A and B via SSA.gov or at a Social Security office, select a Part D drug plan if choosing Original Medicare, and decide whether to add Medigap supplemental coverage or go with Medicare Advantage during the 6-month Medigap guaranteed-issue window. For plans on how to compare Medicare eligibility options, see the Medicare eligibility guide.
7 Steps to Get Coverage
Common Mistakes That Cost People Thousands
Costly errors people make when transitioning from ACA Marketplace to Medicare at 65:
- Continuing to collect ACA subsidies after Medicare eligibility begins. The IRS will recapture the premium tax credits you received for months you were Medicare-eligible on your tax return, turning a free subsidy into a large tax bill.
- Missing the 7-month IEP window. Without a valid exception (active employer group coverage at a 20-plus employee firm), missing the IEP means a permanent 10% per year Part B penalty and a General Enrollment Period wait until January 1 through March 31 with coverage starting July 1.
- Treating COBRA as a valid reason to delay Medicare. COBRA coverage does not count as active employer group coverage for the Part B delay exception. Taking COBRA at 65 and skipping Medicare Part B triggers the lifetime penalty.
- Not canceling the Marketplace plan on time. Failing to cancel means paying full unsubsidized premiums for overlapping months. Contact healthcare.gov at 1-800-318-2596 to request cancellation effective the last day of the month before Medicare starts.
- Skipping Part D because you take no prescriptions. Going 63 or more days without creditable drug coverage triggers a 1% per month permanent Part D penalty. Enroll in a low-cost Part D plan even if you currently take no medications.
- Missing the Medigap 6-month open enrollment window. If you choose Original Medicare and want Medigap, the guaranteed-issue window is the 6 months beginning the month you are both age 65 and enrolled in Part B. After it closes, Medigap insurers in most states can deny you or charge more based on health history.
Why ACA Subsidies Stop When You Turn 65: The Tax Law Explained
ACA premium tax credits exist under 26 U.S.C. Section 36B, which explicitly bars subsidies for months a person is eligible for Medicare Part A. The restriction is not discretionary. CMS and the IRS enforce it through Form 1095-A reconciliation on your annual tax return. When your tax return shows you received premium tax credits for months you were Medicare-eligible, the IRS issues a notice of repayment for the excess advance premium tax credit (APTC). For a 65-year-old paying $800 per month in full-premium value, receiving 6 months of unlawful credits can create a $4,800 repayment bill at tax time. This is not theoretical: the IRS routinely catches this through data-matching between SSA and the Marketplace. The safest course is to cancel your ACA plan effective the last day before your Medicare start month and enroll in Medicare on your eligibility date.
One exception exists: if you are still working at an employer with 20 or more employees and have active group health coverage from that employer (or your spouse's employer), you may delay Medicare Part B without penalty and continue Marketplace enrollment. In that limited scenario, the IRS allows subsidies to continue as long as the employer coverage is the primary payer and Medicare is not yet mandatory. The moment that active employer coverage ends (at retirement or job loss), you trigger an 8-month Medicare Special Enrollment Period during which you must enroll in Part B or face the lifetime penalty. At that point you should also cancel your ACA plan through healthcare.gov and switch fully to Medicare.
Medicare Savings Programs: Getting Help With Part B Costs After Leaving the Marketplace
Four Medicare Savings Programs (MSPs) help lower-income Medicare enrollees pay Part B premiums, deductibles, and cost-sharing. The Qualified Medicare Beneficiary (QMB) program covers Part B premiums, deductibles, and most cost-sharing for those at or near 100% of the Federal Poverty Level. The Specified Low-Income Medicare Beneficiary (SLMB) program covers Part B premiums for those at 100-120% FPL. The Qualifying Individual (QI) program covers Part B premiums at 120-135% FPL. All four are administered by state Medicaid agencies, not Medicare itself, so applications go to your state agency. In 2026, the QMB income limit is approximately $1,350 per month for a single person (100% FPL). Enrollees in any MSP automatically qualify for Extra Help with Part D drug costs, capping most copays at $4.50 to $11.20 per fill. Apply through your state Medicaid agency or call 1-800-MEDICARE.
- QMB (Qualified Medicare Beneficiary): at or near 100% FPL. Covers Part B premium, deductible, coinsurance.
- SLMB (Specified Low-Income Medicare Beneficiary): 100-120% FPL. Covers Part B premium only.
- QI (Qualifying Individual): 120-135% FPL. Covers Part B premium only. Must apply annually.
- Extra Help / Low-Income Subsidy (LIS): up to 150% FPL. Caps Part D drug copays. Auto-assigned or apply at SSA.gov.
Original Medicare vs Medicare Advantage: Which Path Is Right at 65?
Original Medicare (Parts A and B) is administered directly by the federal government and lets you see any provider nationwide who accepts Medicare, with no network restrictions. The trade-off is cost unpredictability: Original Medicare has no annual out-of-pocket maximum, leaving enrollees exposed to potentially unlimited 20% coinsurance for Part B services. Most people pair Original Medicare with a standalone Part D drug plan and a Medigap supplemental policy, typically Plan G in 2026, which covers the Part B excess and most cost-sharing after the Part B deductible. Medigap Plan G premiums for a 65-year-old ranged from $100 to $250 per month in 2026 depending on state and carrier, but must be purchased during the guaranteed-issue window.
Medicare Advantage (Part C) bundles Parts A and B through a private insurer approved by CMS, typically adding Part D drug coverage and extra benefits such as dental, vision, and hearing at $0 additional premium beyond the Part B amount. Medicare Advantage plans must cap in-network annual out-of-pocket costs at no more than $9,250 in 2026 (the federal ceiling). The trade-off is network restrictions: unlike Original Medicare, Advantage plans require using in-network providers (HMO) or charge more for out-of-network care (PPO), and most require prior authorization for procedures. New Medicare enrollees should use the plan finder at Medicare.gov to compare actual 2026 plans available in their ZIP code before making a final decision.
Documents You Need to Complete the ACA-to-Medicare Transition
Completing the ACA-to-Medicare transition in 2026 requires coordinating three separate administrative actions: canceling the Marketplace plan, enrolling in Medicare, and selecting a Part D or Medicare Advantage plan. Each action requires different documentation.
- Social Security number (yours and your spouse's if applicable)
- Current Marketplace plan ID number (for cancellation at healthcare.gov)
- Proof of Medicare eligibility date (Social Security letter or SSA.gov confirmation)
- Current employer letter confirming active group coverage (only if you are delaying Part B)
- List of current prescriptions for Part D or Medicare Advantage plan comparison at Medicare.gov
- List of current doctors and specialists for network comparison (critical for Medicare Advantage HMOs)
- Form 1095-A from your Marketplace plan (for tax reconciliation of any advance premium tax credits received)
Frequently Asked Questions
What is my Medicare enrollment window when I turn 65 while on ACA Marketplace?
Your Initial Enrollment Period (IEP) is a 7-month window: the 3 months before your 65th birthday month, the birthday month itself, and the 3 months after. For example, if you turn 65 in October 2026, your IEP runs from July 1 through January 31, 2027. Enrolling in the first 3-month segment (July through September for an October birthday) gives you Medicare coverage starting October 1. Enrolling in or after the birthday month delays coverage by one to three months depending on timing.
Can I keep my ACA Marketplace plan after turning 65?
You can keep the plan itself, but you cannot keep the ACA premium tax credits once you are Medicare-eligible. The IRS bars subsidies under 26 U.S.C. Section 36B starting the month you qualify for Medicare. Keeping the plan without subsidies means paying full unsubsidized premiums, which run $500 to $900 or more per month for a 65-year-old in 2026. The only valid scenario for continuing both: you have active group coverage from an employer with 20-plus employees and are legally delaying Medicare Part B under that employer exception.
What documents do I need to transition from ACA to Medicare?
You need your Social Security number, your current Marketplace plan ID number to request cancellation at healthcare.gov, your Medicare eligibility date (confirm at SSA.gov), and a list of your current prescriptions and doctors for Part D and Medicare Advantage plan comparison. Keep your Form 1095-A from the Marketplace for year-end tax reconciliation of any advance premium tax credits you received before your Medicare eligibility date.
What happens if I miss the 7-month Medicare IEP after leaving ACA?
Missing the IEP without a qualifying exception means you must wait for the Medicare General Enrollment Period (GEP), which runs January 1 through March 31 each year, with coverage starting July 1. Note: a Marketplace SEP based on turning 65 does not prevent the Part B penalty; only a valid employer group coverage exception does. You also face a permanent Part B late enrollment penalty of 10% for every full 12-month period you could have had Part B but did not. At the 2026 standard premium of $202.90 per month, two years of delay adds roughly $40.58 extra per month forever. Medicaid and Dual-Eligible programs are year-round exceptions and are not affected by this deadline.
Is COBRA a valid reason to delay Medicare Part B after turning 65?
No. COBRA continuation coverage does not count as active employer group health coverage for the Part B delay exception. The Part B delay rule requires current active coverage from a current employer with 20 or more employees. COBRA, retiree health plans, and individual or marketplace plans all fall outside that definition. Choosing COBRA at 65 instead of enrolling in Medicare triggers the permanent 10% per year Part B penalty once you eventually enroll, plus a Part D penalty if you also go 63 or more days without drug coverage.
What state-specific rules affect my transition from ACA to Medicare?
The federal rules governing ACA subsidy termination and Medicare IEP penalties are uniform across all 50 states. However, state variation matters for two pieces: Medigap availability and Medicare Savings Programs. In Massachusetts, Minnesota, and Wisconsin, Medigap is regulated differently and plans may have different names and structures. Medicare Savings Program income limits vary slightly by state because states can set them above the federal floor. Apply through your state Medicaid agency to find your state-specific MSP income limit and get help with Part B premium costs after leaving the Marketplace.
Do I qualify for a Medicare Savings Program after leaving my ACA plan?
Medicare Savings Programs are income-based and administered by state Medicaid agencies. In 2026, the Qualified Medicare Beneficiary program covers Part B premiums, deductibles, and most cost-sharing at income at or near 100% of FPL, which is about $15,960 per year for a single person. The Specified Low-Income Medicare Beneficiary program covers Part B premiums at 100-120% FPL. If your income drops significantly after retirement and you are now Medicare-eligible, apply through your state Medicaid agency because these programs can eliminate most or all of your Part B costs. Extra Help also caps Part D drug costs at a few dollars per fill up to 150% FPL.
What is the Part D late enrollment penalty and how do I avoid it?
The Part D late enrollment penalty is 1% of the national base beneficiary premium (about $38.99 in 2026) for every month you go without creditable prescription drug coverage after first becoming Medicare-eligible. The penalty is permanent and added to your Part D plan premium for life. Avoid it by enrolling in either a standalone Part D plan or a Medicare Advantage plan that includes drug coverage within 63 days of your Medicare eligibility date. If you had creditable drug coverage through your ACA plan before Medicare eligibility, that coverage may count, but confirm in writing with your prior insurer.
