Turning 65? Here’s What You Need to Know.

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Herb, because he was turning 65, had his mailbox is crammed full of mail from insurance companies every week pushing their Medicare plans. With all this information, who can possibly get a grip on it? Even at 64 and 6 months, Herb has a lot to do. Spending time with his grandkids, going fishing with his buddy, and then there is the Florida trip coming up with his wife. Herb needs help sorting all this out. 

People who are aging into Medicare get stressed out of all the changes they face. What about enrolling in social security, and what about Medicare. It’s not just you, and there are many resources you can use to help you through this change. 

You need to make some critical decisions.  People get confused about when and how and when to enroll in social security and Medicare. Do you need to apply for social security now or wait? Do you need to sign up for Medicare Part A and/or Part B? What are your options for Medicare?

The longer you can wait to draw your social security benefit, the higher your monthly payment will be.  But if you’re not drawing social security when as you’re turning 65, you will have to enroll in Medicare. It’s not automatic. If you’re not drawing social security, you’ll also have to make arrangements to pay your Part B premium some other way. 

You should also consider the potential taxation of your Social Security benefit, especially if you are still working. Individuals with incomes between $25,000 and $34,000 and couples with incomes between $32,000 and $44,000 will have 50% of their benefit payment included in their taxable income. The percentage increases to 85% if the individual income is over $34,000, or $44,000 for couples.

Careful consideration should be given to your enrollment into Medicare.  People who are already receiving social security benefits at least four months prior to turning 65 will automatically be enrolled in Parts A and B. Otherwise, they will need to sign up for Medicare.  Medicare says to sign up four months ahead of the time you want to start your Medicare. 

When to Wait to Enroll in Part B

In Herb’s case, he might need to wait to sign up on Medicare because he is still employed and covered by his group plan. People who are still working and covered by group insurance might consider waiting to sign up on Medicare Part B. In Herb’s case, he needs to know whether the group plan is the primary or secondary payer.  If the company has more than 30 employees, then generally their plan is primary (it pays the majority of claims). If this is the case for Herb, he will not need Medicare Part B until he loses his group insurance.  

Medicare Part B is the insurance that pays 80% of medical expenses. If the group plan is paying the 80%, or the lion’s share of claims, he would not need Part B.  Herb should ask his group administrator if his plan is primary or secondary. 

Herb heard from a friend he should just play is safe and go ahead and sign up on Part B even though he is still working and covered by a group plan.  But if he did, he would be needlessly spending his money on a Part B premium for insurance he doesn’t need, and he would also be using his Medigap open enrollment period in the process. Herb might need this open enrollment right later, especially if his health is not good.

VA Benefits

Herb also has VA benefits, but he was concerned the doctor and hospital he wanted to use wasn’t in the VA system.  He wanted the option to go to providers outside the VA without any hassle. For this reason, Herb decided to sign up for Medicare Part A and B and take out a Medigap policy after he loses his group plan. 

Medigap Open Enrollment Period

Susan is new to Medicare. She will be turning 65 on the 25th of this month, and she is confused about when she will start on Medicare. She talked with her trusted agent and found out her Medicare starts on the first of the month she turns 65. She also found out when she enrolls in Part B of Medicare, she has the right to enroll in a Medigap policy for up to six months without answering any health questions.  If Susan had still been covered by a group plan, she would not have wanted to sign up on Medicare Part B, because she would have wanted to preserve her open enrollment period for when you are no longer covered by a primary group plan. If you have certain medical conditions, this right could be the only way for you to get a Medigap policy.

Guaranteed Issue Period

When Herb loses his group plan, even if he had previously enrolled in Medicare Part B, he has a  guaranteed issue period for a Medigap policy. Herb will have 63 days to apply for a Medigap policy without answering health questions. If Herb were to have certain health conditions, this right might be the only way he could qualify for a Medigap policy. 

Medicare Advantage Plans and Medigap Plans

Medicare Advantage Plans are similar to group insurance in that the plans cover inpatient and outpatient supplies and services and sometimes prescription drugs. Like a group plan, the beneficiary will usually have to use network providers, and have to accept responsibility to pay a substantial out of pocket cost medical costs. The upside of a Medicare Advantage plan is that the premium could be lower, and the plan might include some limited dental vision or hearing benefits not included in original Medicare. The plan may or may not include Part D prescription plan. The two main drawbacks to these plans are unexpected, unbudgeted medical bills and lack of access to your choice of medical providers.

Medigap policies may cost more upfront, but they generally give you access to almost every medical provider in the country. If the healthcare provider accepts Medicare, they will accept the Medigap policy.  People who have Medigap can choose from many Medicare Part D prescription plans. Medigap policies pay the lion’s share of medical expenses not paid by Medicare, so the insured person has very little to pay on Medicare-approved expenses.

If you’re turning 65 and are having trouble understanding all the information being thrown at you, let us help.

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Justin Brock

President & CEO of Bobby Brock Insurance