Tag Archives: medicare and medicaid

Maximize Your Medicare

My Comments: The ideological fight now gripping much of the country includes healthcare and whether it’s a privilege or a right. It is moving rapidly into the arena of a ‘right’ as opposed to a ‘privilege’.

Some of this is driven by demographics; the number of people qualifying for Medicare is growing daily. Some of it is driven by expectations and the reluctance of old people to simply roll over and die.

A hallmark of society from day one has been to look after children and elders. As an elder myself, and unwilling to roll over and die just yet, I’m happy to add my voice to the argument that as a very wealthy nation, we can, and must, find a way to make sure the elderly are properly taken care of.

Selena Maranjian May 20, 2017

These five ways to maximize your Medicare can help you keep costs down while getting good care. They might even help you live longer and better.

With healthcare costs now making up about 17% of our country’s entire GDP, it’s become a challenge for many of us to be able to afford care. Companies and individuals are looking for ways to keep costs down — and for most folks aged 65 and up, Medicare is an important piece of the puzzle.

Indeed, there are close to than 58 million enrollees in Medicare, as of March 2017. Considering that there are roughly 325 million people in America, that’s a hefty 18% of the population — nearly one in five. Since it’s in the cards for most of us, here are five valuable ways to maximize your Medicare.

Enroll at the right time — being late can cost you

If you’re late enrolling in Medicare, your part B premiums (which cover medical services, but not hospital services) can rise by 10% for each year that you were eligible for Medicare and didn’t enroll. Yikes!

When, then, should you enroll? Well, you’re eligible for Medicare at age 65, and you can sign up anytime within the three months leading up to your 65th birthday, during the month of your birthday, or within the three months that follow.

There’s a helpful loophole, too: If you’re among the many Americans who are already receiving Social Security benefits by the time they reach age 65, you should be enrolled in Medicare automatically. You might also avoid the late-enrollment penalty and be able to skip the deadline if you’re still working, with employer-provided healthcare coverage, at age 65, or if you’re serving as a volunteer abroad.

Choose wisely between “original” Medicare and Medicare Advantage plans

There isn’t a single Medicare plan for everyone. Each enrollee needs to make some decisions — with the primary one being whether you opt for “original” Medicare or a Medicare Advantage plan.

Traditional or “original” Medicare features Parts A and B that respectively cover hospital expenses and medical expenses. If you opt for it, you’ll likely add Part D, which offers prescription drug coverage, including insulin supplies. Instead of opting for parts A, B, and D, though, you can choose from among available Medicare Advantage plans, sometimes referred to as Part C. Offered by private insurance companies, they are required to provide at least as much coverage as Parts A and B — and they usually offer significantly more. They cap your out-of-pocket expenses, too.

While original Medicare doesn’t cover hearing, vision and/or dental care, many Medicare Advantage plans do — and they generally include prescription drug coverage, too. While original Medicare will often have you footing 20% of many bills with no end in sight, a Medicare Advantage plan might charge you a low copay per doctor visit or service, with the total amount you’ll pay limited. (The average out-of-pocket cap was recently $5,223, but many plans feature caps below $3,000, and the limit for 2017 is $6,700.) While original Medicare lets you see any healthcare provider who accepts Medicare, Medicare Advantage plans will typically limit you to a network of doctors — though these networks are sometimes very big.

To help you zero in on your best choice, make a list of the prescription drugs you take and the doctors you see. Also list the kinds of healthcare services you need and use, noting any upcoming surgeries or big-ticket expenses. When you review the plans you’re considering, see which drugs they cover and which doctors are included — and how much you’ll likely spend out of pocket with each one. The Medicare Plan Finder at the Medicare website can help you compare and choose. Note the star ratings of your candidate plans and favor four- or five-star plans. Note, too, that you can change your mind once a year, during the annual enrollment period, and can switch between plans.

Get screened

Once you’re in a Medicare plan, make the most of the screenings and preventive care that are available — typically at no cost to you. Doing so can help identify problems early, before they grow worse and more costly. (A polyp caught early via a colonoscopy can prevent lots of heartache and costs down the road.) Screenings can keep you healthier and living longer and better, while keeping your healthcare costs down.

Here are some of the services that should cost you no additional dollars (though some require doctor’s orders) include: abdominal aortic aneurysm screening, alcohol misuse screening and counseling, bone density measurement, cardiovascular disease screenings, cervical and vaginal cancer screenings, colonoscopies and other colorectal cancer screenings, depression screenings, diabetes screenings, flu shots, hepatitis B shots and hepatitis C screenings, HIV screenings, some home health services, lung cancer screenings, mammograms, nutrition therapy services, obesity screenings and counseling, pneumonia vaccine, prostate cancer screenings, sexually transmitted infection screenings, and smoking and tobacco-use cessation counseling.

Try telehealth services if you can

Many plans these days offer enrollees telehealth services. These permit patients consult with doctors and other healthcare professionals electronically, often via a Skype-like video connection. These consultations can cost less than an in-person visit to your doctor and can be more convenient, too, saving you from having to make an appointment a few days away, travel to your provider, and spend time in a waiting room. You can typically have a consultation immediately or within hours. This can be especially useful if you’re traveling when you need a doctor or medical help.

Telehealth services aren’t available to every original Medicare enrollee, but it’s available to some. And some Medicare Advantage plans offer it, too.
Make the most of wellness benefits

Finally, aim to get well and/or stay well via wellness benefits included in your Medicare coverage. For starters, all enrollees are entitled to one wellness visit annually at no extra cost to them. That’s when you can see your primary care doctor to review your health. Don’t skip this, as it gives your doctor a chance to discuss ways to get you healthier instead of just ways to treat the illness or injury you walked in with. You may have access to other health benefits and perks, too, such as discounts on gym memberships. Find out what your plan offers and make the most of those benefits. When you’re shopping for a Medicare plan, review available wellness perks, too, to see which would serve you best.

To maximize your Medicare, don’t just wait until you’re not feeling well to visit your healthcare provider. Instead, take advantage of all the care you’re entitled to, such as preventive screenings and your annual wellness visit.

Medicare Statistics

My Comments: Medicare is a critical element for retired Americans. These statistics are not jaw-dropping but re-affirm our need to be very careful about making changes to Medicare.

I’m not convinced the folks in Congress have my best interests in mind when they talk about making changes.

Consider yourself enlightened.

Maurie Backman | Apr 20, 2017

You’re probably aware that Medicare provides health coverage for seniors 65 and older. But did you know that Medicare has several distinct parts, each of which provides its own set of services?

Here’s a quick breakdown:
• Medicare Part A covers hospital visits and skilled nursing facilities.
• Medicare Part B covers preventative services like doctor visits and diagnostic testing.
• Medicare Part D covers prescription drugs.

There’s also Part C, Medicare Advantage, that offers a host of additional services. Whether you’re approaching retirement or are many years away, here are a few key Medicare statistics you should be aware of.

1. There are 57 million Medicare enrollees in the U.S. 
A good 16% of the U.S. population is covered by Medicare, but it’s not just seniors who get to enroll. Younger Americans with disabilities are also eligible for coverage.

2. About 11 million people on Medicare are also covered by Medicaid.
Though Medicare offers a wide array of health benefits for seniors, it doesn’t pay for everything. In fact, about 20% of Medicare enrollees rely on Medicaid to pay for services Medicare won’t cover, such as nursing home care.

3. Net Medicare spending totaled $588 billion in 2016.
That’s about 15% of the federal budget. And that number is expected to rise to nearly 18% of the budget in about a decade’s time.

4. The standard Medicare Part B premium amount in 2017 is $134.
Many people assume that Medicare enrollees don’t pay a premium to get coverage, but it isn’t true at all. While Part A is generally free for most seniors, Part B comes at an estimated cost of $134 per month. That number may also be higher depending on your income, or lower if you were collecting Social Security as of earlier this year and had your Part B premiums deducted directly from your benefits.

5. Poor health can be 2.5 times as expensive for Medicare enrollees.
A 2014 report by the Kaiser Family Foundation (KFF) revealed that the typical Medicare enrollee who identified as being in poor health had out-of-pocket costs that totaled 2.5 times the amount healthier beneficiaries faced. This is just one reason it’s crucial for Medicare enrollees to capitalize on the program’s free preventative-care services. Catching medical issues early can often result in a world of savings.

6. A single hospital stay under Medicare can cost almost $4,500 out of pocket. 
Here’s some more discouraging news out of KFF. Back in 2010, Medicare enrollees who had a single hospital stay incurred $4,475, on average, in out-of-pocket costs.

7. Medicare enrollees 85 and older spend three times more on healthcare than those aged 65 to 7.  It’s probably not shocking news that older seniors spend more money on medical care than those a decade or more their junior. But what may be surprising is just how much those 85 and over wind up spending. According to KFF, in 2010, Medicare enrollees 85 and older spent close to $6,000 to cover their healthcare needs.

8. In 2015, 243 medical professionals were charged with Medicare fraud. It’s not uncommon for members of the medical establishment to engage in Medicare fraud, whether it’s in the form of inflating bills, performing (and charging for) unnecessary procedures, or billing for services that were never rendered. The good news, however, is that officials are getting better at identifying and prosecuting Medicare fraud. In fact, in 2007, the Medicare Fraud Strike Force was created to put a stop to fraudulent activity that eats away at the program’s limited financial resources.

9. More than 17 million Americans are enrolled in a Medicare Advantage plan. Medicare Advantage is an alternative to traditional Medicare that offers a number of key benefits, such as coverage for additional services (including dental and vision care) and limits on out-of-pocket spending. Between 1999 and 2016, 10 million Americans signed up for a Medicare Advantage plan, and enrollment now represents roughly 30% of the Medicare market on a whole.

10. A good 38% of Medicare funding comes from payroll taxes.
Nobody likes paying taxes, but without them, Medicare simply wouldn’t have enough money to stay afloat. Currently, the Medicare tax rate is 2.9% for most workers (which, for salaried employees, is split down the middle between worker and employer), but higher earners making more than $200,000 a year pay an additional 0.9%.

Getting educated about Medicare can help you make the most of this crucial health program. It pays to learn more about how Medicare works so that you can take full advantage when it’s your turn to start using those benefits.

What You Should Know About Medicare Enrollment

health-is-wealthMy Comments: Medicare, along with a Medicare supplemental policy, is, for many millions of Americans, a critical element in their lives. I know it is in mine and that of my wife.

As longevity raises its sometimes ugly head, the ability to seek professional health care when the need arises, without having to worry about its cost, is a huge peace of mind element. This is a simple and effective introduction.

David J. Fernandez, CFP® February 1, 2017

One important area of planning for a successful retirement is to have adequate healthcare coverage, including Medicare. Healthcare costs have been escalating at over twice the rate of inflation for a number of years. For those wanting to retire prior to age 65, healthcare is typically one of the largest bridge expenses to cover until Medicare eligibility.

For most people, their health insurance is provided through their employer. Or, if self-employed, they likely own a private health insurance policy. But once you reach age 65, you have the opportunity to transition to the federal government’s Medicare healthcare system. This article will provide a quick overview of some of the options available, answer some frequently asked questions and provide some resources to help you navigate the system.

Medicare: the Four Parts
• Part A – Hospital insurance that provides coverage for inpatient hospital services, care received in skilled nursing facilities, hospice care and some home healthcare. There is no premium cost for this coverage. However, there are co-pays, deductibles and co-insurance when seeking medical care.
• Part B – Medical insurance that provides coverage for outpatient care such as doctors’ visits, laboratory and imaging tests, medical supplies and preventative services. There is a monthly premium which is automatically deducted from your monthly Social Security check. If you are not receiving Social Security benefits, your premium will be billed to you once a quarter. In 2017 the base premium is $134 per month. You may pay a larger premium if your annual income is higher. You can learn more about your potential premium costs in this article. Your Part B coverage generally covers 80% of your covered care expenses after a deductible has been met.
• Part C – Medicare Advantage Plans, which are Medicare-approved private insurer plans that typically provide medical coverage for Part A, Part B and often include prescription drug coverage. Many of these plans provide extra coverage and may lower out-of-pocket costs.
• Part D – Prescription drug coverage. This particular coverage is optional and has a monthly premium that varies depending on the plan you choose. Similar to Part B coverage, those with higher levels of income may pay higher premiums. The link to my article above provides a chart of premium surcharges for Parts B and D based on income level.

What is Medigap Insurance?

In addition to the options mentioned above, there are approximately 12 different private insurance plans which vary by state. These extra coverage plans are often referred to as Medicare supplemental insurance or Medigap. These policies are designed to fill in the coverage gaps found in original Medicare Parts A and B. A large percentage of those receiving Medicare are also enrolled in one of these policies.

When to Apply for Medicare

If you are already receiving Social Security benefits prior to turning age 65, you will automatically be enrolled in Medicare Parts A and B. If you are not receiving Social Security benefits, then you have a seven-month window to apply. You can apply three months prior to turning age 65, the month you turn 65, and up to three months after you turn 65. Your Medicare benefits will generally begin approximately one month after you enroll.

How to Apply for Medicare

You can enroll in Medicare Part A and Part B in the following ways:
• Online at http://www.SocialSecurity.gov
• By calling Social Security at 1-800-772-1212, Monday to Friday from 7a.m. to 7p.m.
• In person at your local Social Security office; it is recommended that you call first for an appointment.

Should Choose a Coverage Plan for Part C, Part D or a Medigap Policy?

Because each person has a unique health history with specific health coverage needs, you may want to consult with a local resource to help you compare and contrast your options. Every state offers a free health benefits counseling service for Medicare beneficiaries. You can search by your state for the local SHIP office (state health insurance assistance program). This is a valuable service available to answer all of your Medicare questions. You can also seek a private, independent health insurance broker that specializes in Medicare plans.

What if I Don’t Enroll on Time? Is There a Penalty?

If you don’t sign up for Medicare Part B (medical insurance) when you are first eligible at age 65, there is a 10% penalty for every 12 months you are not enrolled on time. The current base premium for part B is $134. Thus you would pay an extra 10% every month for this premium going forward. If you didn’t sign up for two years you would pay 20% extra every month for as long as you are enrolled in Part B.

What if I Had Health Coverage Provided by an Employer?

Medicare does provide an exception if you are covered under group healthcare via an employer, and therefore do not enroll on time. You need to provide a letter of credible coverage from your employer when you sign up and they will usually waive the penalty.

Additional Resources for Your Medicare Questions

Besides the SHIP link above, or an independent health insurance broker, another option is to call Medicare directly at 1-800-Medicare or 1-800-633-4227. If you prefer searching for your answers online, you can go directly to http://www.Medicare.gov.

3 Medicare Myths – Debunked!

stiegler-tired-doctorMy Comments: Today is Tuesday and I normally post something about Social Security. But health issues in retirement are a major concern for many of us. So paying for timely and necessary medical help becomes another critical issue. While it might be necessary to tweak the system from time to time, the headlines coming out of Washington DC these days suggests chaos is right around the corner. Let’s hope it doesn’t apply to Medicare.

By Maurie Backman | Published January 12, 2017

Medicare provides countless Americans with the healthcare services they need. But as is the case with many government-run programs, there’s a fair amount of confusion surrounding Medicare and how it works. Here are three common myths you may have heard about Medicare — and the truth behind them.

1. It’s free
Though Medicare Part A, which covers hospital stays, is free for most enrollees, this isn’t always the case. Some people have to pay for Medicare Part A, and if you’re one of them, it could cost you up to $413 a month. Parts B, C, and D, meanwhile, are never free.

Medicare Part B, which covers doctor visits and preventative care, has a standard premium of $134 for the entire year of 2017, but it could be higher — or lower –depending on your income. However, if your premiums are deducted from your Social Security benefits, you’ll actually pay a little less ($109 on average).

The costs for Medicare Part C and D will depend on the plan you choose. Part C, Medicare Advantage, offers a number of services that surpass the benefits of Parts A and B, but there are costs and restrictions to consider as well. Part D, meanwhile, covers prescription drugs, and the amount you pay will depend on your earnings. If your income is $85,000 or less as a single filer, or $170,000 or less as a couple filing jointly, you’ll pay only your plan premium. But if your income exceeds these thresholds, you’ll pay more.
The following table shows what you can expect to pay for Medicare Part D based on your income:
medicareparddBut it’s not just premiums you’ll pay; you’ll also be responsible for deductibles plus a portion of your healthcare costs. With Part A, for instance, you’ll pay a $1,316 deductible per benefit period, which starts the day you enter a hospital or skilled nursing facility and ends the day you haven’t received care for 60 days in a row. Part B, meanwhile, comes with a $183 deductible per year. Once that deductible is met, you’ll typically pay 20% of the Medicare-approved amount for most services. Understanding what Medicare costs you’ll be responsible for can help you budget accordingly, which is especially crucial for anyone living on a fixed income.

2. It doesn’t matter when you enroll

Medicare eligibility kicks in once you turn 65, but you can enroll during the three-month period before the month of your 65th birthday. In fact, your initial enrollment window lasts seven months in total, ending three months after the month you turn 65. And while you technically don’t have to sign up during your initial enrollment period, it’s in your best interest to do so. If you’re late signing up for Medicare, you can expect your Part B premiums to rise 10% for every year you were eligible for coverage but failed to enroll.
Now if you’re already getting Social Security by the time you reach 65, you’ll probably be enrolled in Medicare automatically, but make sure to confirm that you’re all set to avoid a penalty later on. Additionally, if you’re still working at age 65 and therefore get health insurance through your employer, worry not — you can hold off on signing up for Medicare without incurring a late enrollment penalty.

3. It’s for seniors only

While most Medicare enrollees are 65 and older, younger Americans with certain medical conditions are also eligible. If you’re disabled to the point where you qualify for SSDI (Social Security Disability Insurance), you’ll qualify for Medicare once you’ve received benefits for two years. However, because you need to wait five months before receiving SSDI, your effective waiting period for Medicare is essentially 29 months from the time you become disabled. As of 2014, an estimated 8.9 million disabled Americans were enrolled in Medicare. Those with ALS (Lou Gehrig’s disease) and end-stage renal disease are also eligible for Medicare regardless of age.
Understanding how Medicare works can help you make the most of your benefits. Whether you’re a current enrollee or expect to sign up in the near future, it pays to learn more about Medicare’s many nuances.

How Much Will Your Health Expenses Be In Retirement?

Cost-of-careMy Comments: Having access to medical care is a big deal. Having access to medical care that you can afford is a big deal. And it becomes a bigger deal when you are no longer employed and attempting to live the rest of your life with some degree of financial freedom.

By Glenn Ruffenach July 15, 2016

Question: My wife and I are trying to set up a budget for retirement, and we’re wrestling, in particular, with health-care expenses. How can we estimate what our medical bills will look like in the future?

An important — and vexing — question. For instance, a healthy person will have fewer and/or smaller medical bills in later life, right? Well…maybe not. As a recent study, “An Apple a Day: The Impact of Health Conditions on the Required Savings” noted, “Excellent health, ironically, can actually raise an individual’s lifetime health spending needs because of the likelihood that healthy 65-year-olds will live much longer.”

A good starting point (and a study worth reading in full) is the “2015 Retirement Health Care Costs Data Report” from HealthView Services Inc., a provider of health-care planning tools in Danvers, Mass. According to HealthView, a healthy 65-year-old couple can expect to pay, on average, $266,589 for insurance premiums and $128,365 for related expenses (dental, vision, copays and out-of-pocket bills) over their lifetime.

Another good resource—one with an emphasis on prescription-drug costs—is “Amount of Savings Needed for Health Expenses for People Eligible for Medicare” from the Employee Benefit Research Institute in Washington. The study estimates that a couple, where both spouses have median drug expenses, would need $259,000 to have a 90% chance of having enough money to cover health-care bills in retirement.

Note: Neither report accounts for possible long-term-care expenses. For that piece of the puzzle, check out Genworth Financial’s GNW, +2.72% 2016 “Cost of Care Survey.”

I am due to begin required withdrawals from my retirement savings. What are the advantages and disadvantages of an annual lump-sum withdrawal as opposed to a monthly payout?

In most cases, a required minimum distribution, or RMD, in the form of a single annual payout causes fewer problems — if you have a good amount of self-discipline.

Yes, monthly withdrawals act like a regular paycheck. But, to take a worst-case scenario, if you die midyear, your family must withdraw the remaining RMD, says Carolyn McClanahan, founder of Life Planning Partners Inc. in Jacksonville, Fla. Figuring out how much has already been withdrawn and how much remains to be withdrawn can (at times) be a hassle.

With a single lump sum, you can deposit the funds in a savings account and then arrange for monthly transfers to your checking account, creating (in effect) a regular paycheck. And if you wait until November or December to take an RMD — when you have a clear picture of all your income for that year — you can calculate your tax withholding on the withdrawal more accurately.

The one cautionary note about a single annual withdrawal: willpower, or the lack thereof. “Some people spend it all at once if they take it as a lump sum,” McClanahan says.

I have a question about paying my grandchildren’s tuition. I understand that if I pay the institution directly there is no tax consequence for my grandchild or me. Does this apply only to tuition or does it include room and board?

The answer: just tuition. But you have some flexibility here.

To start, the “tax consequence,” in this case, is the federal gift tax. You can give as much as $14,000 in cash or other assets to as many people as you wish each year, and those gifts won’t count against your (the giver’s) lifetime exemption. (In all, you can give away $5.45 million before gift taxes kick in.) If you exceed the $14,000 ceiling in a given year, you have to file a gift-tax return. That said, there are exceptions to these rules.

Under section 2503(e)(2) of the Tax Code, “any amount paid on behalf of an individual as tuition to an educational organization” is exempt from gift taxes. Note the wording: “tuition.” Period. There’s no mention of associated costs, like books, room and board, etc.

This shouldn’t stop you, however, from paying the grandchild’s tuition — and then either gifting him $14,000 to pay room and board, or paying room and board up to $14,000 directly, says Barry Kaplan, chief investment officer at Cambridge Wealth Counsel in Atlanta. And if both grandparents are alive, each can gift $14,000, for a total of $28,000.

My husband started taking Social Security at his full retirement age, but continued to work. He is now 75 and still working full time. Over the past 10 years, his benefit has gradually increased because of cost-of-living adjustments and his continuing contributions (via his paychecks) to Social Security. I am nearing full retirement age and am trying to figure out how much I would receive as a spousal benefit. I know that — at my full retirement age — I can qualify for half of my husband’s benefit. But do I get half of what he started receiving 10 years ago, or half of what he is receiving now, including the adjustments to his benefit?

Your spousal benefit would be based on your husband’s current payout, including the cost-of-living adjustments and any increases tied to his continued wages. To get a better idea of how much the spousal benefit will be, says Darren Lutz, a public affairs specialist with the Social Security Administration, your husband can create a “my Social Security” account at socialsecurity.gov/myaccount to see what his full benefit is, before deductions for Medicare premiums, etc. Then you can visit the agency’s retirement planner for spouses to learn more about potential benefits.

Glenn Ruffenach is a former reporter and editor for The Wall Street Journal, and co-author of “The Wall Street Journal Complete Retirement Guidebook.” Email your questions and comments to askencore@wsj.com.

11 Medicare Mistakes to Avoid

healthcare reformMy Comments: If you are 65 and older, Medicare is fantastic. Okay, it has its limitations, but coupled with what is known as a MediGap or MedSup plan, it’s fantastic.

You can argue all you want about how this country is slowly sinking into a socialist morass, but when you reach my age, health issues surface almost weekly, not annually. Being able to seek advice from medical professionals without first thinking how it might break the bank, is a huge component of financial freedom. HUGE, I say.

July 18, 2016 By Ginger Szala

First, let’s generally define the Parts of Medicare. Part A, referred to as original Medicare, focuses on hospital coverage. Part B is medical coverage. Part C (also called Medicare Advantage) is a different way of putting Parts A and B into one plan, offered by private companies. Part D is prescription drug coverage.

The rules of Medicare are complicated and laden with deadlines that are costly to miss. Via Kiplinger, here are 11 common Medicare mistakes to avoid:

1. Not reviewing your Part D Plan annually
Medicare Part D is a headache for many to keep on top of. But remember these key points:
• Open enrollment runs from Oct. 15 to Dec. 7 every year.
• During open enrollment it’s essential to review options because there might be changes to your current plan, meaning your cost and coverage would vary. Be leery of plans that increase premiums, increase your percentage of cost for drugs, or other requirements, like having to use a specific pharmacy, to be covered.
• Make sure you check if any drugs you’re on have gone generic, as you might get a nice price reduction.
• Medicare also helps you to compare plans. Check out the various links on Medicare.gov or AARP.org for more information, guidance and price comparison tools.

2. Picking the same Part D plan as your spouse
Not all Part D plans are alike, and just because a plan works for you it might not be the same for your spouse, who may be taking different prescriptions. Use the Medicare Plan Finder to determine your out-of-pocket costs on each plan. Also keep in mind that some plans require the use of specific pharmacies.

3. Going out of network on private Medicare Advantage plans
If using private Medicare Advantage plans, similar to PPOs or HMOs, you’ll need to utilize the network of doctors and hospitals within the plan to get the lowest co-payments. Be wary that if you go out of network, there may be no coverage at all.

4. Not knowing how to switch Medicare Advantage plans anytime if needed
Even outside the annual open enrollment period, it’s possible to switch plans for life-changing events, like moving to a place that isn’t in your current plan’s geographical coverage. And if you’re in the five-star plan, you can make a switch any time during the year. Also, from Jan. 1 to Feb. 15, you may be able to switch from Medicare Advantage to traditional Medicare plus Part D prescription-drug plan.

5. Not considering Medigap within 6 months
Once enrolling in Medicare Part B, you have six months to buy any Medicare supplement plan in your area even if you have pre-existing conditions (and at age 65, who doesn’t?). But after six months, insurers can reject you or charge more depending on your health. It depends on your state rules and insurer’s policies. Check at Medicare.gov for your options.

6. Not opting for Medicare when you turn 65 (most of the time)

Forever young, so who needs Medicare? Well, you’re smart to take advantage of what the government is giving you, often for free. If you are getting Social Security already when you turn 65, you’ll automatically be enrolled in Medicare Part A and Part B. But if you aren’t receiving Social Security benefits, you’ll have to act on your own to sign up. There are reasons to delay: for example, you or your spouse have a full-time job and already get health care coverage as a part of that. Be aware that if you aren’t collecting Social Security benefits, there’s a seven-month period to sign up for Medicare, which runs from three months before the month you turn 65 to three months after.

7. Not signing up for Part B if you have retiree or COBRA coverage
Again, there are many tricky steps in the Medicare signup game. Unless you or your spouse are receiving insurance through a current employer (who has 20 or more employees), Medicare is considered your main health insurance coverage. Retiree coverage, COBRA or severance benefits are NOT primary, and if you don’t sign up for Medicare, you might have gaps in coverage and be late on your Part B premium. So pay attention.

8. Missing the Part B enrollment deadline after leaving your job

It’s an alphabet jungle out there, but this one is easy: if you still have insurance through a job when you turn 65, that’s fine. You don’t need to worry about Part B premiums. But within eight months of leaving your job, you need to sign up or you might have to wait for the next enrollment period, meaning a gap in coverage. Then there is also the possibility of a 10% lifetime late-enrollment penalty.

9. Ignoring income thresholds
Most people pay the minimum of $140.90 a month for Part B premiums and $12.30 per month for Part D. This goes higher depending on your adjusted gross income. So if you are bringing in more than $85,000, that Part B premium could more than double per month, where as Part D could jump fivefold. Be mindful when you are withdrawing from tax-deferred accounts that you don’t go over the income threshold if possible.

10. Not fighting surcharge changes for the year you retire
The Social Security Administration uses your tax returns from the most recent two years to determine if you are subject to an income surcharge, that is you are making more than $85,000 a year. But you can protest it if you prove life-changing events, such as divorce, death of a spouse or retirement.

11. Not minding your HSA contributions

You can’t contribute to HSAs if you are getting Medicare, but if you or your spouse have health insurance through a job (with 20 or more employees) and haven’t applied for Medicare or Social Security benefits, you still can continue to add to your HSA. That said, be careful about contributions in the year you leave your job and sign up for Medicare, as your HSA must be prorated by number of months on Medicare.

Social Security: When to Claim at 66

SSA-image-2My Comments: Many of my close friends, clients and associates have long since started taking their Social Security benefits. For those of you who have not, there are probably some issues you need to explore before you sign on the dotted line.

A generation ago, 65 was the automatic full retirement age. Rembember the phrase Full Retirement Age or FRA; it’s that point in time when it first all comes together for you. Based on your past contributions to the system, the FRA represents the base line number to determine how much you’ll receive for the rest of your life.

Start at age 62 and you get considerably less; wait until age 70 and you’ll get a lot more. But there’s a catch. You have to remain alive to get more since the SSA is not going to intentionally send a monthly amount if you’re dead.

I have access to software that will help you explore the various options, and there are more than you think, that will help you make the best timing decision less confusing. Here are a few to start you thinking.

by Donald Jay Korn JUL 6, 2015

“It’s most common for our clients to begin Social Security benefits at age 66,” says Brandon Jones, a senior wealth manager at Accredited Investors, a fee-only planning firm in Edina, Minn.

If sexagenarian clients still have substantial earned income, starting earlier would trigger an earnings penalty. When they reach 66, seniors now reach “full retirement age (FRA),” for Social Security purposes. (Any reduction in cash flow from the earnings penalty may be temporary, as seniors subsequently will get makeup benefits.)

FULL RETIREMENT AGE
“At 66, someone can earn any employment amount and still receive the full Social Security benefit,” says Marilyn Capelli Dimitroff, director of wealth management and principal at Bloomfield Hills, Mich.-based Planning Alternatives, a wealth advisory firm.

“Therefore, the 66-year-old who waited receives a significantly higher monthly check than the 66-year-old with the same earnings record who began payments at 62, the earliest starting date. The differential continues for life.”
Starting at 66 avoids the 25% benefit reduction imposed at age 62, so the early bird with a $1,800 monthly check could have received $2,400 a month by waiting until 66.

“For the majority of people, postponing the receipt of Social Security to at least FRA is a smart move,” says Dimitroff. “Most seniors will need to work to 66 or later to maintain financial security in very old age.”

IMMEDIATE GRATIFICATION
Waiting even longer, until as late as age 70, would increase benefits even more, yet many clients start at 66 anyway. “We human beings value a ‘bird in the hand,'” says Dimitroff, so some people want to collect from Social Security as soon as practical.

In addition, Dimitroff notes, monthly Medicare premiums are due for many people, starting at age 65, and it’s easier to have the payments subtracted from Social Security direct deposits rather than writing checks periodically. “A third reason for starting at 66,” she says, “is that most people underestimate how long they are likely to live.” Some people just invest their unneeded Social Security checks, she adds, hoping to exceed the 8% annualized increase they would have received for waiting beyond age 66.

SPOUSAL STRATEGIES
Moreover, 66 can be a key milepost for spousal claiming strategies. For married couples, says Dimitroff, delaying the benefit start from 62 to 66 increases the spousal benefit as well as the worker’s benefit.

“For a one-earner couple,” says Jones, “we may recommend that the earning spouse file at FRA and immediately suspend the benefit, allowing the other spouse to begin claiming a spousal benefit. Meanwhile, the earning spouse’s benefit continues to grow, with the intent of beginning benefits at age 70.”

Jones adds that a similar strategy can work if one spouse has considerably more lifetime earnings than the other spouse.