One of the most commonly asked questions I receive is, “I am turning 65 and I have employer health insurance, do I need to sign up for Part B of Medicare?”
To start, let me explain what Parts A and B are. Part A of Medicare covers inpatient care in a hospital or skilled nursing facility, while Part B covers doctor’s visits and other outpatient care.
For most Medicare beneficiaries, the Part A decision is easy because it doesn’t cost anything. Therefore, most people will sign up for Part A as soon as they turn 65. But the Part B decision can be a little more complicated, since you have to pay a monthly premium for Part B which is $104.90 for most individuals.
When deciding whether to sign up for Part B, the first question you need to answer is whether you have employer health insurance through your employer based on your active employment or if you are covered under your spouse’s employer plan based on his/her active employment. The key word here is “ACTIVE.” If your health coverage is based on active employment, then whether you decide to delay Part B will depend on the number of people employed by the employer providing the insurance.
If there are 20 or more employees at the company where you or your spouse work, then the employer insurance pays first and Medicare pays second. If this is the case then you may want to delay enrolling in Part B as long as you are happy with the employer coverage and the cost is not too high.
If there are fewer than 20 employees then Medicare pays first and the Employer plan pays second. In this scenario you should not delay enrolling into Part B. If you decline Part B you will have no primary insurance for doctor office visits or outpatient services, which is usually like having no insurance at all.
In either case, as long as you have coverage from active employment, you will have a Special Election Period to enroll in Part B when you retire with no late enrollment penalty. It is important to remember that COBRA and retiree insurance are not considered current employer insurance and you will not have a Special Enrollment Period. If you have COBRA or retiree insurance and delay enrollment in Part B you may have to pay a penalty when go to sign up.
Medicare is a big animal with a lot of rules, so it is important to discuss your personal situation with an expert before you make these decisions.
An ex-vice president, a rock star and a singer/songwriter/guitarist all turned 65 in January and February. Find out who they are…
I know many of you enjoy this post, so I’m sorry I’ve missed it for a few months. So let’s catch up and see who turned 65 in:
We are happy to announce that our search for a permanent home is over. We recently purchased the property that is currently Campbell’s Meats at 2551 Michigan St. (St. Rt. 47). Mr. Campbell has decided to retire after 27 years in business. We officially closed on the building yesterday and hope to begin renovations in January sometime.
We are extremely excited about the location and the added space. The building is 2300 square feet and will give us the space needed to include a training room so that we can offer more educational workshops and help even more retirees. Our goal is to be moved in by April 1st.
We will keep you updated on our progress!
Medicare has finally released it’s premium, deductible and coinsurance numbers for 2013. I will highlight the changes here…
- The Part A Hospital deductible will increase from $1156 to $1184, an increase of $28.
- The Part B premium will increase from $99.90 to $104.90, an increase of $5.
- The Part B deductible will increase from $140 to $147, an increase of $7
- The Skilled Nursing Facility coinsurance will increase from $144.50 (for days 21-100) to $148, an increase of $3.50.
Many individuals have a medicare supplement plan that will pick up many if not all of these deductibles and coinsurance amounts. If you would like to see all of the numbers you can view it HERE.
Our next Solving the Medicare Puzzle Workshop will be held on Thursday, November 15 at 5:30 pm in our Sidney office at 1271 Wapakoneta Avenue, Sidney. Seats may be reserved by calling our office at 937-492-8800 or online by clicking https://seniormark.com/workshops/ .
If you know someone who would like to or should attend, please share this post with them!
Find out which author, supermodel and rock musician turned 65 in September…
According to a recent Money Magazine article, there is an alarming trend emerging which is resulting in big bills for Medicare patients. This trend has to do with Skilled Nursing Facility care and Medicare’s requirements for covering it. And if a service is not Medicare approved, you are on the hook for the full bill, which could cost in the thousands of dollars. And Medicare Supplement insurance follows Medicare’s decisions, so that won’t help either. So, let’s find out what Skilled Nursing Facility care is, what is causing the problem and what you can do about it?
Skilled care is healthcare given when you need skilled nursing or rehabilitation staff to treat, manage, observe and evaluate your care. This type of care is typically given in a Skilled Nursing Facility which could also be a Long Term care facility. An example would be a patient who has undergone a joint replacement and needs to go to a facility temporarily to get rehabilitation so they can get back on their feet. If your stay is Medicare approved, Medicare fully covers the first 20 days of skilled care and all but $144.50/day for days 21-100, and many medicare supplement plans will pick up this daily copay amount giving you a total of 100 days at no cost to you. A patient in the Money magazine article had a 10-day rehab stay which was not medicare approved and she got a bill for $7,027. Of course she didn’t know this until she got the bill.
There are many requirements for a stay to be Medicare approved (which can be viewed here) but the major culprit is the requirement of a 3-day inpatient hospital stay prior to going into the Skilled Nursing Facility. The key word here is “inpatient.” The problem arises because many hospitals are beginning to keep patients under observation as opposed to inpatient, due to Medicare’s crackdown on costs (Medicare pays hospitals far less for observation than for inpatient stays). From the patient’s viewpoint there is no difference in the care you receive, so you won’t know by looks whether you are inpatient or under observation. Even if you start your stay under observation and switch to inpatient later, the observation days won’t count toward the 3-day inpatient requirement.
So what can you do to prevent this from happening? Here are a few suggestions:
- Don’t Wait/Don’t Assume: Your best shot at getting Medicare to cover a skilled nursing stay is to have your status switched to inpatient while you are in the hospital. Appealing a Medicare decision after the fact is much tougher and a lengthy process. So ask your doctor and case manager what your designation is. If it’s observation, press your doctor to review your status and take your case and full medical history to the utilization review committee.
- Bring in Help: Ask your primary physician to call the hospitalist and explain what risk factors or conditions might warrant a higher level of care.
- Arrange Home Care: If all else fails and you can’t afford to go to a nursing facility, talk to the discharge planner. Medicare covers a limited amount of home help, even if you weren’t an inpatient.
So, before you get blindsided by a huge rehab bill, make sure a family member is aware of these requirements and can help you should you have a hospital stay in your future.
Much of the above information was derived from the August 2012 Money Magazine article “This Could Hurt-a Lot” by Amanda Gengler.
There are many problems with these products, but the biggest is that the caps and participation rates they quote you when you first buy the annuity are typically not guaranteed contractually. In fact, many of the “promises” they make up front are not guaranteed. They may give you a participation rate of 100% initially, but if you read the contract they have the right to lower it at their discretion. So if the markets move in a direction that hurts the insurance company, you may find out that they have the right (contractually) to lower your payout to 50%, or your cap to 3-4%.
I know this to be true first hand as my Dad purchased one. Believe it or not, he was told his participation rate would be 110%. And it was for the first year! But when his anniversary date rolled around he received a letter from the insurance company. You guessed it…they were reducing his participation rate down to 50%, and there was nothing he could do about it because the annuity had a 7 year penalty period if he cashed out early. And can you guess what his participation rate was for the remaining 6 years? You got it…50%. And I’ve heard the same thing from clients of mine who have had these products with caps that started at 10-12% and are now down to 4%. And if you have one that charges a fee, that fee can be raised contractually.
Another problem with these annuities is the length of time you are locked in to the agreement, called a “surrender period.” Most of the ones sold today lock you in for 10 years, meaning if you take your money out early you will pay a penalty. The number one selling EIA in 2011 had a 10 year surrender period and the penalty was 10% for the first 3 years on the contract. I have also seen higher surrender periods and penalties. I met with a client a year ago and her surrender penalty was 17% in the first year with a surrender period of 15 years.
So how do you protect yourself? The easiest way would be to avoid these products altogether, as there are better options for you. If you ARE considering an Equity Indexed Annuity, then make sure you do your homework. Make sure you are getting your advice from the right person, which is probably not the person who is pitching it to you. I recommend getting a second opinion from an advisor who doesn’t earn a commission from the product.
If you have had any experience with an equity indexed annuity (good or bad), please share it with us by leaving a comment below.
Check out who turned 65 in August…