Medicare 2026

Switching From a Marketplace Plan to Medicare: What to Do About Timing, Tax Credits and Coverage Gaps

Moving from a Marketplace health plan to Medicare is one of those transitions that sounds simple and then turns out to have a few moving parts. The coverage doesn't swap over on its own, the premium tax credit you may have been getting can create a tax-time surprise if it isn't handled, and the timing of your Medicare enrollment matters for the rest of your coverage life. Here's a plain-English walk-through of what to know.

Start with your Medicare enrollment window

Most people become eligible for Medicare around their 65th birthday. The Initial Enrollment Period spans the three months before your birthday month, your birthday month, and the three months after. If you have a Marketplace plan, Medicare & You 2027 is clear: Marketplace coverage is not considered coverage from current employment, so there's no reason to delay. Waiting can mean a gap in coverage and a lifetime late enrollment penalty for Part B — and potentially Part D.

If you miss that window and don't qualify for a Special Enrollment Period, the General Enrollment Period runs January 1 through March 31 each year, with coverage starting the month after you enroll.

Marketplace coverage doesn't end on its own

This is the single biggest point of confusion. When Medicare starts, your Marketplace plan keeps running — and billing — unless you end it. You have to log back into your Marketplace account and update the application to end that coverage.

The good news is you can line things up neatly. You can report your Medicare start date up to three months before Medicare begins. HealthCare.gov's own example: if your Medicare begins May 1, you can update your Marketplace application as early as February 1 to report that May 1 start date, and your Marketplace coverage will then end April 30 — the day before Medicare kicks in. That's how you avoid both a gap and an overlap.

The premium tax credit problem

Here's where people get caught off guard. The savings you may have been getting on your Marketplace premium — the advance premium tax credit — and any cost-sharing reductions stop once you're eligible for premium-free Part A, or once your Part A or Medicare Advantage coverage starts. Medicare & You 2027 notes this applies once you're considered eligible for premium-free Part A, or if you already have Part A with a premium.

If you keep the Marketplace plan anyway, you pay full price going forward. And if you continue receiving advance premium tax credits after you're eligible for Medicare, you'll likely have to pay back some or all of those credits when you file your federal tax return. The IRS requires anyone who received advance premium tax credit payments to complete Form 8962 and attach it to their return.

The Marketplace does periodically cross-check records. If it sees you have Medicare but are still getting a premium tax credit, you may get a letter giving you 30 days to act before the Marketplace changes your coverage based on what's on your application.

A narrow exception

There's one scenario where you actually have a choice: if you would have to pay a premium for Part A (because you or your spouse didn't work enough quarters to qualify for premium-free Part A), you can choose between enrolling in Medicare and keeping a Marketplace plan with financial help. Outside that situation, it's actually against the law for someone who knows you have Medicare to sell you a Marketplace plan.

Don't forget drug coverage

Prescription drug coverage in a Marketplace plan isn't required to be "creditable" — meaning as good as Medicare Part D. But Marketplace plans must tell you in writing each year whether yours is. Hang onto that notice. If your Marketplace drug coverage wasn't creditable and you delay signing up for Part D, you can end up with a Part D late enrollment penalty that follows you for as long as you have Part D. The penalty is calculated using a national base beneficiary premium, which for 2027 is $41.33.

What Medicare looks like in 2027

Once you're on Medicare, a few program-wide numbers are worth knowing. The Part D out-of-pocket cap is $2,400 in 2027 (up from $2,100 in 2026). The most any Part D plan may charge as a deductible in 2027 is $700. Social Security announced a 3.6 percent COLA for benefits payable beginning January 2027. The 2027 Part B standard premium and deductible, and the IRMAA income brackets, had not been announced at the time of this writing — CMS typically publishes those in the fall.

Annual Enrollment (also called Open Enrollment) for 2027 Medicare coverage runs October 15 through December 7, 2026, with choices taking effect January 1, 2027.

Original Medicare or Medicare Advantage?

As you move off the Marketplace, you'll face a familiar-feeling fork: Original Medicare (often paired with a stand-alone Part D plan and sometimes a Medigap policy) or a Medicare Advantage plan that bundles hospital, medical and usually drug coverage. Each has trade-offs. Original Medicare generally lets you see any provider that accepts Medicare nationwide, and Medigap can make out-of-pocket costs more predictable, but you pay separate premiums. Medicare Advantage plans often include extra benefits and cap your in-network out-of-pocket spending, but they use provider networks and rules like prior authorization. Neither is "better" — it depends on your budget, your providers, your medications and how you like to get care.

If you have Medicaid or Extra Help

Since 2025, people with Medicaid or Extra Help have a monthly Special Enrollment Period to move to Original Medicare with a stand-alone Part D plan, or to switch stand-alone Part D plans. Full-benefit dual-eligible individuals can also join an integrated D-SNP in any month.

Where can you get help with Medicare questions?

For official enrollment tools, plan comparisons and the latest figures as they're announced, visit Medicare.gov or call 1-800-MEDICARE (1-800-633-4227), TTY 1-877-486-2048, 24 hours a day, 7 days a week.