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Your Medicare Enrollment

This is the first Question for Your Map to Medicare.

When do I enroll in Medicare A and B, and what’s the cost?

Let’s say you are turning 65 on September the 15th. Today is May the 10th. You are starting to get mailers from different insurance companies. Some are pitching their plans and others are offering information. Every day it seems there is another piece in your mailbox. Some say no premiums while others say you get money back. Free this free that. Confusing, isn’t it? What is real and what is hype? Have you heard the phrase “Separate the signal from the noise?” Well, all those mailers are noise and we need to get to the signal.

Here is the signal. Here is the absolute 1st thing you will need to do, and it’s answer Question #1.

When do I enroll in Medicare A and B? Forget the other stuff for now because there will be plenty of time for that later. Your birthday is September 15. You have 3 months before September, your birth month of September, and then 3 months after September to enroll in Medicare. A 7-month time frame. This is your Initial Enrollment Period.

But what if you are still working- do you need to sign up for Medicare. Not necessarily. Medicare says that if you work for a company with more than 20 employees and have a plan that is “creditable”. Which means it is a major medical plan deemed to be comparable with Medicare and has a drug plan as well, that means you do not have to enroll in Medicare when you turn 65. How do you determine if a plan is “creditable”? Ask your benefits administrator at work.

There is a lot of misinformation regarding this. I have had clients tell me that a relative told them they had to enroll in Medicare or be fined for life. Once a lady told me her doctors office billing person told her she absolutely had to enroll in Medicare even if she was still working and had coverage. Not true.

Let’s say you are still working and have a company plan with a low deductible and low premium. How do you decide whether to keep that plan or go on Medicare? We see cases like this all the time and here is what we do. We compare the costs of a company plan, the premium, the deductibles, and the out-of-pocket costs with a few Medicare plans. Sometimes the results are that it’s best to stay with the company plan and other times, it’s best to move to Medicare. But we won’t know until we take the time to drill down into plans and find the true costs.

We have had clients who are turning 65 with a company plan and their younger spouse is on the plan. What happens with the spouse who loses coverage and needs to find a plan on the health exchange? What are the costs of doing that?

I’m telling you this so you will understand there are not always simple answers to seemingly simple questions, but it’s very important to determine if you should or should not enroll in Medicare when turning 65.

Now there is one exception to enrolling at age 65. If you are disabled and have received SSDI for 24 months, you will be auto enrolled in Medicare on month 25- even if you are younger than 65.

Let’s go back to our turning 65 scenario. If you are turning 65 in September, as I mentioned earlier, and you do want to enroll in Medicare A and B, you can do so after June 1. Your coverage will start on September 1. Here is where to go to enroll: ssa.gov. But what if you are drawing social security benefits as you turn 65. If you are drawing retirement benefits, then you will be auto enrolled in Medicare A and B. You will not have to go to ssa.gov and enroll. Of course, if you have questions regarding your enrollment, just call Social Security at 800-772-1213.

After you enroll, it takes 2-3 weeks before you receive a letter affirming your enrollment and a card will follow soon after that. Even though you have a 7-month window, it’s always best to get this done well before your September birth month. Why? If you wait to enroll in October, then you must wait 2 months for your coverage to start. If you wait until November or December, there is a 3 month wait. So, unless you just want to delay coverage, enroll before your birth month.

Here is another distinction with Medicare enrollment. Let’s say your birthday is the 1st of the month – September 1. If that is the case, then your Medicare start date would be August 1 not September 1. Tricky, eh? If you were born on the 1st of any month, your Medicare would start the month before. I have seen that a few times and usually, it comes as a surprise to the client.

Let’s say you start your enrollment into Parts A and B. What are the costs? For Part A, if you or your spouse have worked and paid into Medicare for 10 years or 40 quarters, there is no premium charge for Part A. If you don’t have the 40 quarters, you will have a premium to pay. Check with us for the specific amounts for that premium.

Part B has a premium and it is income based. For 2021, the base premium is $148.50 a month, but not everyone has to pay that. More on that later. Here is how the Part B premium is calculated. If you enroll in 2021, Social Security will take your 2019 tax return and use the MAGI or Modified Adjusted Gross Income number/ or the AGI or Adjusted Gross Income. What is the difference between MAGI and AGI?

MAGI can be defined as your household’s adjusted gross income with any tax-exempt interest income and certain deductions added back. The IRS uses MAGI to establish if you qualify for certain tax benefits. For most people, the Adjusted Gross Income is what is used. For 2019, it’s on line 8b of your return.

If you are a single filer, then your AGI needs to be less than $88,000 and for couples filing jointly, it’s $176,000. If you exceed those numbers, you pay more. But you pay more for Part B and Part D. There are 2 additional premiums. It gets higher the more you make.

Before moving on let’s recap.

You have 7 months to enroll in Medicare upon turning 65 but save yourself anxiety and get it done before your birth month.

If you have coverage through your or your spouse’s work, compare that coverage with Medicare. Then make an informed choice.

Determine what your Part B premium is based on 2019 MAGI or AGI.

Have you or you spouse paid Medicare taxes for 10 years or 40 quarters. If so, you will have no premium for Part A.

Next, we will look at Original Medicare Parts A and B.

Medicare has neither reviewed nor endorsed this information.

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