Tip 203- The ACA Ended “Job Lock”

Working until age 65 (Medicare eligibility) used to be pretty much the only option for someone with serious health problems; i.e., if you couldn’t get health insurance, you couldn’t afford to retire. We called that “job lock.”

This week, the attorney for a 57 year old business owner called. He and his client are negotiating the sale of the client’s company and they thought they had come across a stumbling block.

It seems the sale is largely motivated by the declining health of the owner. He’s been in and out of the hospital multiple times over the last two years. The buyer for the business expressed concern about the potential for hundreds of thousands in self-funded claims adding to the cost of the acquisition.

I asked if the seller was going to be employed by the buyer. The answer was no.

Under provisions of the Affordable Care Act, the seller’s loss of coverage – the end of his employment – creates a “Special Enrollment Period.” The SEP allows the seller to buy any individual health plan, from any insurer, without regard to pre-existing conditions.

Problem solved.