In our society, certain significant birthdays go along with rites of passage . . . age 16 we get a driver's license; age 18 and our young men register for Selective Service; age 21 we can legally order a Margarita (okay, my personal choice); then there is a long spell until age 65 when we qualify for Medicare and must enroll in the system or face a penalty; and under current law my generation reaches full retirement age at 66 meaning we can draw our full Social Security retirement benefit; followed by age 70 1/2 when the IRS makes us take our required minimum distribution (RMD) from our retirement accounts. Each of these milestones has meaning and requires some understanding of the legal and social ramifications of the privilege. Today, our goal is to provide some insight into the process we followed as we approached the magical retirement related milestone of Medicare. We will address Social Security and RMDs at another time.
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| Who me? Yes! |
Bob was diagnosed with cancer on his 60th birthday. I begged him to quit work and we'd live on whatever savings we had at the time. I felt he'd had a big wake-up call that life is short and there are more enjoyable ways to spend your life than going to work. His response was that he never needed his job more . . . because like many other Americans he needed his group health insurance. He couldn't be without health insurance as he faced treatment, nor could he secure a private health insurance policy. This was 2007 when health insurance could and did deny coverage for pre-existing conditions, which certainly cancer would have been classified. So he continued to work and we were grateful for his health insurance coverage. Fortunately, Bob actually liked his job.
In 2012 Bob turned 65 and along with that came the responsibility to enroll in Medicare, our nation's medical insurance for seniors and also the good news that he had reached his "five years cancer-free" mark. We understood the Medicare rules to mean that even though Bob was continuing to work, and had employer provided group health insurance, he needed to enroll in the Medicare system but did not necessarily need to make the service effective. Our local hospital provides a very informative community education outreach program on various healthcare topics and one of the classes offered was a seminar on Medicare. I attended the class and later Bob and I met with the instructor for a one-one consultation. She confirmed our understanding of the rule and explained the initial enrollment window was a 7 month period consisting of the three months before and after, and including the month of your 65th birthday. If you did not enroll during this window you could be assessed a penalty unless you were covered under a major medical insurance policy provided by your employer. So Bob went online to
https://www.medicare.gov and within a few minutes he had enrolled in Medicare Part A. That's all that was necessary because his enrollment would not be effective until he needed it to be and at that time he could determine which other parts of Medicare were important to him.
My turn in 2014 and I was dragging my feet. I have no idea why but I could not bring myself to go online and enroll in Medicare. Just days before my 65th birthday, and with Bob's insistence, I did enroll. It only took minutes and the initial enrollment questionnaire (IEQ) seemed pretty straight forward. Within a couple weeks my Medicare card came in the mail and I literally sat in my comfy chair holding the card and saying to myself "even the government thinks I'm old!" Yes, I had an emotional reaction to getting my Medicare card! I probably also had a Margarita that evening.
And about a week later I got a bill from Medicare. So not only did the government confirm that I was old but now they wanted my money, and I was not even using Medicare yet because we still had Bob's employer provided major medical as our primary insurance. Off I went to our local Social Security office! Yes, it was a busy day but I think every day must be busy at the SSA. I waited easily an hour but I love to people watch and it was actually an interesting multi-cultural, bi-lingual experience. The counselor immediately realized what I'd done wrong when completing my IEQ. The SSA counselor was patient, had a sense of humor, and helped me correctly answer the questions on the "let's fix your Medicare enrollment form." I later got confirmation of the changes and the bill was cancelled until the plan becomes effective.
Fast forward to last month (2015) and we are nearing Bob's retirement date and the immediate cancellation of his employer medical insurance. Again, I go to the SSA for a questions and answers session. The counselor provides me with a form for Bob's benefits manager to complete stating that we have been continuously covered by medical insurance with no uninterrupted period since we had turned 65 and should have activated our Medicare coverage. Okay, that's easy to get done and then we both go back to the SSA to return the form and more Q&A. This time the counselor recognizes me (I'm there way too often!) and he helps us establish our effective date for Medicare Part A and signs us up for Part B (medically necessary and preventive services.) It should be noted that Medicare Parts A & B are commonly called "traditional Medicare." Also available are Medicare Advantage Plans and they should be researched and considered as an option.
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| Lots of info! |
Now we have to decide how to pay for Medicare. Most people let the SSA withhold the premium (currently $104.90/mo/individual) from their retirement benefits. Or, you can elect to get a direct bill from the SSA, just like I'd received upon my first attempt at enrolling. We opted for the SSA to withhold our premiums so our retirement benefits will be net of our Medicare premiums. Don't forget that Medicare is a medical insurance and counts toward your medical deductions if you opt to itemize deductions for income tax preparation.
Getting enrolled in Medicare is only part of the responsibility of preparing for retirement and planning for your health coverage. Bob will provide insight into sorting through the myriad of options available for supplement health insurance and prescription coverage in a later post. Our effective date for Medicare coverage is May 1, and we'll share further insight into our experiences as we begin to use it. Remember that list of milestones . . . we can cross Medicare off the list!
