Medicare question

In My Humble Opinion
1

My husband will be turning 65 in October. He currently has a good job and has every intention of working there as long as he can. His current employer says that he can continue his current insurance plan with them even after retirement.

He’s saying that because of this, he doesn’t have to apply for Medicare. This sounds very dicey to me. I don’t want to rely on his say-so because so much is at stake. He has a track record of hand-waving away important stuff because he dislikes paperwork and fuss.

The way I read it, whether you plan to start using Medicare or not, you should apply for it about three months before your 65th birthday. I’d like to start nagging him to do so, but I’m not sure of the facts here. I won’t turn 65 for five years yet, so I haven’t been receiving or reviewing the paperwork.

Can anyone enlighten me about the basic requirement here?

2

If he has Medicare, it will function as a second insurance, and pay copays and deductibles he has on his current policy. Unless his current policy is totally free with no copays and deductibles, he will benefit from Medicare. It also helps to already have it in place if he becomes ill or disabled and decides to retire. If he exhausts his other policy, he will then already have Medicare in place.

3

When my wife turned 65, her insurance provider automatically cancelled her policy, since she was eligible for Medicare at that point. She had to get a “Medicare supplement” policy to continue to get non-Medicare benefits. You should check with your husband’s current insurance provider to see if that will happen to him.

–Mark

4

Even if he has excellent other coverage, he should apply for Medicare part A (hospitalization insurance). It’s premium free if he paid Medicare taxes while working (and he did) - but if he doesn’t apply for it as soon as he’s eligible Medicare will charge him penalties (according to their web site).

I applied for Medicare part A as soon as I turned 65 even though I continued to have medical insurance as my wife’s spouse for the next three years. Easy Peasy, and as I pointed out above, there were no premiums.

…and you can apply for it online in ten minutes.

5

I have worked extensively with this population as an insurance agent. Your husband will receive a special enrollment period once he retires. Generally, he does not need to apply for Medicare until that point. There are various reasons and scenarios that could apply here, however. Really, there are too many variables involved for an internet message board to be the proper place to get answers for this. Here, you will only get (a) an anecdotal answer or (b) an uninformed answer unless you’re posting a lot of private information in this thread you probably would rather not. The proper person for you to be asking is the benefits administrator for your husband’s employer.

6

I would also note that I would be surprised if you didn’t receive some sort of notice from the HR department at your husband’s employer to provide you with some guidance on what you should do. If not, I would certainly contact the benefits administrator for definitive advice. The problem is that if you start fiddling with how things are already set up, there could be repercussions in how his private coverage works. Everybody goes through this when they reach Medicare eligibility, but there is no cookie-cutter answer because the variables are different for everyone, particularly if you are still actively employed or have some sort of retiree health plan. That is why the employer’s benefits administrator is usually the person with the most definitive answers.

7

Since this is a real life question, let’s move it to IMHO rather than General Questions. There you can get opinions, some of which will be factual.

samclem, moderator

8

There is a penalty for joining Medicare after the first eligible enrollment period. i don’t have the current details, but I was subjected to it way back when.

9

Another strong vote for:
“This is a real, live grown-up matter, not subject to the vaguarities of a message board”

I went through this, and it really was a matter of “Do this NOW”, then, when you get to X spot, do THAT".
I also ran into the fact that many health insurance policies have verbiage to the effect of
“If you are eligible for Medicare, we assume you HAVE Medicare, and will pay only what Medicare does not pay”.

Start with Benefits Admin and ask lots and lots of “What if?” Q’s.
Getting hit by the proverbial truck and being disabled and THEN finding out “OOOOppps”.

10

It is common to misunderstand how the penalties work. Generally, the penalties are attached to Parts B & D (outpatient & drug coverage) but you’re only assessed those penalties in the event of 3 things occurring together: (1) you go through a period of time when you are eligible for Parts B and/or D (2) you do not enroll in Parts B and/or D and (3) you do not have other creditable coverage. Note #3. That is probably not the case here. While it is possible this gentleman’s coverage from active employment is not considered creditable by Medicare, that is unlikely. I have only seen this a couple of times. However, this is part of the reason this member’s questions need to be directed to the benefits administrator. As for the Part A penalty, another poster mentioned this above:

However, see what the text says at the link sevenwood provided:

Note the phrase at the beginning. Most people do not pay a premium for Part A because they get it premium-free due to working. The monthly premium most people pay is for Part B, not Part A. Hence, if you’re not paying a premium for this part of the coverage, you wouldn’t have a penalty on that part anyway. This is also probably not the concern here because this gentleman is working.

This is exactly the primary concern…how that health plan interacts with Medicare. The only person who can give a definitive answer to this question is the benefits administrator because private companies have wide latitude in how they set their plans up. Often, they do wrap around Medicare to varying degrees but they don’t necessarily have to.

Specifically, I would ask at least the following questions:

[ol]
[li]Is my employer-sponsored health plan considered creditable coverage by Medicare?[/li][li]Do I need to enroll in any part of Medicare while I am still actively employed and covered under this health plan?[/li][li]If I do not need to enroll in Part A or B but I do so anyway, how will my health plan interact with Medicare and will anything change in how it works?[/li][li]Is there anything else I need to know or other steps I need to take?[/li][/ol]

Please Note: These questions need to be asked again upon retirement. Generally, a retiree health plan is not the same plan a person was enrolled on while actively employed and they can work differently. The switch may be transparent to the beneficiary but it’s usually a different plan. I’ve seen a couple of cases where the health coverage was considered creditable but the drug coverage was not. It is important to find this stuff out because, if you have problems later, this can come back to haunt your pocketbook, particularly if you don’t realize there’s a problem for 10 or 15 years.

You’re absolutely right. I’ve encountered countless people who have done this…either enrolling on something unnecessarily or not enrolling when they should have. If someone goes past the initial eligibility period without being sure they know what’s going on, they can shoot themselves in the foot. For those who are retiring at 65 and don’t have a retiree health benefit, it’s not that big a deal because they will almost certainly be going right onto Medicare in any case. It is those who are still actively employed or who are covered by retiree health plans who really need to be proactive and make sure they understand how everything works in their situation before doing anything. Although, like I said earlier, the benefit admins know how their own plans work and I’d be a bit surprised if they don’t send out a letter with instructions as a matter of course for employees turning 65. For this gentleman, he turns 65 in October so his initial eligibility period began in July and will run through January (birth month, 3 months before and 3 months after…7 months total). If he has not been specifically told by the benefit admin what he should do, I would be proactive about asking at some point during this period.

11

Good post, I wanted to highlight this section again because it’s important. Almost all employer health plans are creditable. Almost no retirement plans are. If you enroll late in either part B or D and don’t have creditable coverage the penalties are draconian and irreversible. I worked with a woman who was on a great retirement health plan for many years, until they decided they wanted to raise her rates from 100/m to 500/m. The problem was, she was stuck. The penalty for late enrollment made her part B premium almost 600/m. Nothing she could do.

There is also the issue of, is your husband better off on his employer plan? Medicare with a plan F supplement (or even plan G or N) us usually better health insurance than a group plan and it’s also usually cheaper (at least in my state). For my clients I find the break even point is about 2k per year. If your premium for the group plan plus your copay and deductible are less than 2k per year you are better off sticking with the employer plan. If it’s more, you are usually better off with Medicare. Out of pocket maximums on the group plan play a role too but usually only if the other numbers are close to 2k. It’s a rule of thumb and not anything definitive, but it gets you an idea.

It’s not super complicated, but people get overwhelmed. The other thing you can look forward to is a deluge of mail and cold calls marketing to your husband. Before you make any decisions make sure you know your options and don’t necessarily trust anything that doesn’t have a us department of health seal on it.

12

Yeah, I’ve encountered several of these folks. It sucks because there’s nothing that can be done for them.

That’s a good point too. Cost-benefit and risk tolerance analyses are always important. Although, some folks just don’t want to change from what’s comfortable, even if it’s likely to be cheaper. I kind of get the feeling that may be the case here if the gentleman “dislikes paperwork and fuss.”

13

So is it safe to say one should enroll as soon as they are eligible? Are there any potential downsides to doing so?

(I am not ignoring the ask your benefits administrator advice)
mmm

14

Well, Part B isn’t free. For most people it will cost you around 121 a month. For high income earners it may cost more.

If you are still working it MAY be better for you to not enroll until you retire.

15

And remember the Part B premium is before you even get to insurance premiums (supplement + drug plan or Medicare Advantage). What we’re telling you is that there is no cookie-cutter answer. Everyone has a different situation. Ask your friends who’ve recently turned 65 if they know an agent they trust. An experienced & knowledgeable agent who truly has your best interests at heart can be invaluable. Try to find an agency or brokerage offering a lot of different companies if you can.

16

Oh and, unless you are very low income, run away from anyone pushing Medicare advantage plans.

I agree a good agent with a large portfolio of companies is your best bet. Interview them like you would any other professional you want to hire. Look them up on you state department of insurance website.

Also, almost every time the only difference between companies offering the same plan is price. Focus on figuring out which plan is best for you, then find the cheapest company. Your doctor will take it. The coverage will be good. Don’t let names you know blind you. You only have one window to get any plan available in your state no questions asked. So don’t just hop into a plan willy nilly.

17

I wouldn’t say that. I’d be skeptical if that was the only thing an agent had to offer but there are reasons why some people prefer that type of coverage (familiarity, world-wide coverage without a limit, etc.). It depends on the market and the client’s desires. In large Florida cities, those plans might look very attractive because a goodly number of them give back all or part of the Part B premium, have little or nothing in the way of doctor copays and only have a $3400 out-of-pocket limit. That may be very different from, say, a rural county in Oklahoma.

18

Actually that’s a good point. In a place like Florida they may be appropriate. I guess in my mind the key word was pushing.

19

OK, allow me to ask in a slightly different way.

I didn’t know that, in enrolling, you have to start paying; I thought you were just getting your name in there.

So now that I know, Why the “MAY” in your second paragraph. Seems to me, if you are still working you don’t need medicare. Is there a scenario in which one might work and still enroll (paying the 121 per month)?

Obviously I have a lot to learn about this stuff. I appreciate the answers.
mmm

20

Good question, you don’t need it but you might want it. For many people their employer sponsored plan is high deductible and high cost. This is not true for everyone. Medicare supplement and rx plans in my state will run you between $1500 and $2000/year in total medical costs on average. (that is premiums and all possible out of pocket costs) If your total medical costs are likely to be lower on your current plan than that it is probably a good idea to stay with your employer plan. If they are going to be higher it’s often a good idea to switch. It is rarely a good idea to enroll in part B AND keep your employer plan, though sometimes it is.

Like dreamregent said, their isn’t really a cookie cutter one size fits all answer.