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YOU KNOW YOU ARE TURNING 65 WHEN…
It’s just about three months before your 65th birthday, a day of celebration with friends and family. Instead, you want to pull your hair out with the amount of mail and phone calls you receive.
When it comes Medicare it is not a one size fits all scenario. There are many things to consider when aging into Medicare at 65.
Original Medicare, which is your red, white and blue card, is made up of two parts: Part A and Part B.
Part A covers your inpatient hospital care. If you and/or your spouse have worked at least ten years or forty quarters, your Part A premium will be premium $0. If you happen to have worked less than ten years or forty quarters then you are looking at paying a premium for Part A. You would need to connect with Social Security to find out what your premium would be based on your number of working years.
If the Part A premium is of no cost to you, that’s great! You can go ahead and enroll in Part A. However, if you are making contributions to an HSA (Health Savings Account), you can no longer make pre-tax contributions to that account. You can however withdraw money from your HSA after you enroll in Medicare, to help pay for medical expenses such as copays, deductibles etc.
If you decide to delay enrolling in Medicare be certain to stop making contributions to your HSA at least six months before you plan to enroll in Medicare or you will run the risk of facing a penalty. You will want to seek the advice of a tax professional regarding that matter.
Also, in the event, you work for an employer with fewer than twenty employees you may need to enroll in Medicare in order to have primary insurance. This is due to the fact health coverage from an employer with less than twenty employees pays secondary to Medicare.
If you are currently collecting Social Security you will automatically be enrolled in Medicare. If you are not, then you will need to be proactive in enrolling by contacting your local Social Security office or visiting www.ssa.gov just click on the Medicare box on the right-hand side of their website.
Medicare Part B on the other hand is optional but you must know the proper steps to take in order to avoid paying a penalty in the future should you choose to delay Part B. If you are still on an employer’s insurance, compare the benefits and costs such as what is your monthly premium, your deductible, and copays. For starters, the baseline Part B premium for 2021 is $148.50 per Medicare beneficiary.
If your income is higher than the baseline you may pay an Income Related Monthly Adjustment Amount (IRMAA). Your Part B premium is based on your modified adjusted gross income from two years prior due to the fact that is the most recent tax return information provided to Social Security by the IRS.
The other thing to consider is if you are still working and you are also covering a spouse who is not Medicare eligible, you may want to consider staying on your employer plan to keep your spouse covered as well. Otherwise, they will want to get insurance through their own job or through the health exchange.
If you are delaying Part B you will have a Special Enrollment Period. You will have an 8-month period to sign up for Part A and/or B that starts at either the month your employment ends or the month after your group health insurance plan ends, whichever happens first.
This is important to know because a lot of times an employer will offer a “Golden Handshake” where you have the opportunity to retire, your employment has ended and they offer you a year’s worth of health benefits. I have seen where retired employees think they can apply for Part B when their benefits end a year later and that is NOT the case. You will be paying a penalty in that situation. The Part B late enrollment penalty is 10% for each 12-month period you could have had Part B but didn’t sign up.
The biggest mistake I see with people aging into Medicare is not enrolling in a prescription drug plan. I have had a few new clients tell me that they were not on any prescription medications so they didn’t see the need to enroll in a drug plan as they didn’t want to spend the money.
I get that, however, when you go more than 63 days, from the time you are Medicare eligible, without a Part D plan, you will now incur a late enrollment penalty. The penalty is 1% of the “national base premium” multiplied by the number of full, uncovered month you went without a prescription drug plan or creditable coverage. Creditable coverage is drug coverage that is expected to pay, on average, at least as much as Medicare’s standard prescription drug coverage. It could be drug coverage from a current or former employer, Department of Veterans Affairs, TRICARE, or The Indian Health Service.
So as you can see there are lots of moving parts to make a decision about your Medicare needs.
I consider myself a professional hand holder. If you see yourself in this situation, reach out and grab my hand so I can assist you on your journey.
My clients will tell you, they don’t need to stress, they just call Jess!
Whether you are aging into Medicare or are on Medicare and have questions, please feel free to contact Jessalyn Pito, a Licensed Insurance Broker at 203-206-0848. Her services are complimentary.
We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area.
Please contact Medicare.gov or 1–800–MEDICARE to get information on all of your options.