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Integrated Wealth Management

Cancel your Covered California Plan When You Turn 65

If you have a Covered California plan, chances are that you also receive tax credits that reduce your monthly insurance premiums. When you turn 65 and enroll in Medicare, you become ineligible for those tax credits, which can amount to hundreds of dollars a month. As a result, you will not only lose your tax credit but you will also need to start budgeting for the premiums on Medicare Part B & a supplemental plan.

One thing to keep in mind is that Medicare and Covered California do not communicate with each other about your policy. And, beware, you will owe money back to the government if you keep taking the credits after your Medicare begins. At the end of this year, Covered California will mail tax form 1095 to all consumers who receive tax credits; this form will detail the amount of tax credits you received and will have to be reported to the IRS when you file your taxes. If the federal government determines that you received more tax credits than you were eligible for, you will owe the government a repayment.

So what does this mean? It means that you need to take the initiative and cancel your Covered California plan. The most prudent thing is to call Covered California and your health plans BEFORE your Medicare becomes effective. Be sure to clarify the dates to cancel the Covered California Plan and begin Medicare, to ensure you don’t have a lapse in health insurance coverage.

If you’re not sure if this applies to you, there’s free, one-on-one Medicare counseling available through a group called the Health Insurance Counseling and Advocacy Program, or HICAP. Visit the California Health Advocates website at or call (800) 434-0222 to find a HICAP office in your county.

Finally, you can’t shop for Medicare plans – be it Part D, Medicare Advantage or Medigap – from Covered California. Covered California specializes in private insurance policies for individuals, families and small businesses. It does NOT sell plans for government-sponsored health programs like Medicare and Medi-Cal. If you need help in this area, please contact our office and we’ll give you a referral to an appropriate professional.