Health Tips and Information

An early retirement sounds like a dream come true for many people. For others, it’s simply a necessity for one reason or another. But if you’re due to retire before age 65, or simply thinking about it, there is one crucial factor to consider: What will you do about healthcare if you retire before the age of Medicare eligibility?

If you find yourself in this predicament, or heading in that direction, you do have options.

Ask about COBRA. If your employer is COBRA-eligible, you can continue enrollment in their group healthcare plan for 18 months after your employment with them ends. And in certain situations, that coverage can extend to 36 months. However, in many cases the COBRA coverage is more expensive, because you’re now paying the full premium without an employer contribution. So do estimate the costs before making a decision.

Join your spouse’s healthcare plan. If your spouse is still working for an employer that offers healthcare benefits, you could simply join their plan. Be aware that their plan might not offer coverage equal to your old one, but there can be various ways to deal with that. A health savings plan can help (more on that later) or you might be able to enroll in additional supplementary policies such as a dental or vision care plan.

Shop for a plan through Covered California. Our statewide health insurance exchange offers a plethora of options for healthcare coverage. And depending upon your income and household size, you might qualify for a subsidy to help with the cost of your premiums. If you plan to relocate in retirement, check with that state’s exchange or shop on the federal exchange, if applicable.

Enroll in a health savings account (preferably now). If you’re enrolled in a low-premium, high-deductible plan now, you can go ahead and set up a health savings account. This account allows you to save pre-tax dollars in an account to be used toward qualified healthcare expenses. And if you don’t use all of your funds during any particular calendar year, the money rolls over to subsequent years. In this way, a health savings account can save you money now, while also serving as a retirement savings vehicle to be used toward healthcare costs in the future.

If you’re considering an early retirement, before the age of Medicare eligibility, call us to discuss your healthcare plan options first. We can help you figure out how to proceed in the most affordable way for your situation.

Once you retire and enroll in Medicare, you might be surprised to learn that you can face thousands of dollars in out-of-pocket healthcare costs each year. That can come as an unpleasant shock to those who are already living on a fixed income and are relying on Medicare to cover their medical expenses. But for some lower-income retirees, there is another option that can help.

Medi-Cal is a program separate from Medicare, but also designed to help with the cost of medical care. It’s funded by both federal and state governments. And yes, some people can qualify for both Medicare and Medi-Cal.

When Medicare doesn’t cover the cost of a service, Medi-Cal often does. Those who are “dual eligible”, meaning they are eligible to enroll in both programs, might be happy to learn that Medi-Cal can cover the cost of things such as:

• Medicare Part B premiums
• Medicare Part B deductibles
• Medicare Part A deductibles (for hospital stays)
• Medicare Part D copayments, and deductibles for covered drugs
• Nursing home care, in facilities that accept Medicaid payment
• Home-based and community-based supports, depending on services available in your area

In order to qualify for Medi-Cal you must meet certain income and assets tests. In some cases, you might qualify by income, but own certain assets that disqualify you. Under those circumstances it can be helpful to speak with an estate planning attorney who is experienced in helping clients qualify for Medi-Cal.

If you don’t qualify for Medi-Cal, certain other savings programs do exist. If you struggle with the cost of out-of-pocket medical bills, call us, we are licensed agents who can assist with your options.

You might wonder why on Earth anyone would want to steal your Medicare number and other data. Are they planning to obtain medical services using your benefits?

That’s possible, but much less likely than other common scenarios. For one thing, all of your Medicare information can help a scam artist steal your identity, which they would then use to obtain credit cards or other resources in your name. Fraudulent companies might also bill your plan for products and services you don’t actually receive. And sometimes, actual insurance agents are to blame; unscrupulous ones do exist, and they might trick you into enrolling in a plan you didn’t want in order to gain the commission.

To protect yourself and your information, watch for these common signs of Medicare fraud.

Calls from representatives. Medicare does not employ representatives who call you to ask details about your plan, your Medicare number, or other information. If anyone calls you claiming to be a Medicare representative, hang up the phone. If you’re concerned about your plan, you can call your benefits administrator to check.

Fear-based tactics. Fear-based tactics are always a sign of either unscrupulous sales tactics or outright fraud. But just to clear up a common misconception: You won’t “lose” your benefits if you don’t make certain changes. You will be re-enrolled in your current plan year after year, unless you make a change during the Annual Election Period in the fall or Medicare Advantage Open Enrollment in January through March. Anyone who tells you otherwise is trying to force you into a change that benefits them.

Fishy rebates or refunds. If you do overpay for a service, your benefits administrator will send you a letter about it. Anyone offering you a rebate or refund over the phone is just trying to gain access to your information.

Tempting extra benefits. Insurance brokers who approach you with tempting “extra benefits” should be viewed with suspicion. This language is often used to trick you into switching your plan or enrolling in additional ones. Always ask to see a broker’s license number before doing business with them.

And of course, know that you can always call us with questions about Medicare. We pride ourselves on doing business ethically and helping our customers access the Medicare plan or plans that are right for them.

You have likely heard that you’re required to enroll in Medicare at age 65, and that you could face a penalty for failing to do so. But how much is the penalty for late Medicare enrollment? And are there any exceptions?

Yes, you’re supposed to enroll in Medicare at age 65, either opting for Medicare Parts A and B (Original Medicare) or a Medicare Advantage plan (which combines the two into one plan). Medicare Part A is free for most people, assuming you accumulated enough work credits, so it’s Part B that imposes a premium and potentially a penalty for late enrollment. That premium will amount to 10 percent of your regular Medicare premiums for each year that you delay enrollment. So if you delay enrollment by five years, your Medicare premiums will have a 50 percent penalty tacked on.

Most people pay the base premium, but some pay higher premiums due to earning higher incomes. So that’s another factor to consider.

But yes, there are exceptions to these rules. If you’re covered by an employer’s group healthcare plan, and that employer has more than 20 employees, then you don’t have to enroll in Medicare until your employment ends. At that point, you will have an 8-month Special Enrollment window in which you can enroll. After that, the penalty would apply.

The above rules also apply to those who are covered by a spouse’s employer-based plan.

Otherwise, yes, you’re required to enroll in Medicare at age 65, during your regular enrollment window. Otherwise you will face a penalty. If you feel that you can’t afford the premiums, you can apply for the Medicare Savings Program, which covers your premiums for you. Those who qualify for the Medicare Savings Program automatically qualify for the Extra Help program, which covers the cost of a Part D (prescription) plan.

It’s very important to enroll in Medicare when you’re required to do so. But if the process seems overwhelming, just remember that help is available to you. Give us a call and we’ll walk you through the enrollment process so that you can avoid penalties or the danger of going without health insurance.

Many of us will require some form of long-term nursing care during our retirement years, and often that will mean residency in a nursing home. But Medicare usually does not pay for this service, and a nursing home can cost several thousand dollar per month. That means we should all plan for the eventual cost of nursing home care, just in case we end up needing it.

Since Medicare won’t pay for a nursing home, the average person has essentially three options:

Qualify for Medicaid (or Medi-Cal in California). This state-funded healthcare program does pay for nursing home care, and will usually pick up many other out-of-pocket medical expenses not covered by Medicare. However, Medicare is a needs-based program, and you must qualify based on your income and assets. At times it might become necessary to mee with an estate planning attorney, who can help you make certain maneuvers with your assets so that you can qualify for Medicaid and get your nursing home stay covered.

Self-pay. If you have significant financial assets, you might opt to pay for a nursing home stay yourself. But we definitely recommend that you do the math on this decision well in advance of retirement. For most of us, a significant length of time in a nursing home could wipe out retirement savings and create a dire situation for our spouse or other family members, so don’t just assume you’ll cover the cost yourself.

Long-term care insurance. By purchasing long-term care insurance as part of your retirement planning, you can ensure nursing home coverage (or even coverage for in-home nursing care) in the event that you need it. But timing your enrollment in a policy is critical. The earlier you enroll, the lower your premiums. If you wait until an advanced age to enroll in a long-term care insurance policy, the premiums might be much steeper.

As always, we’re here to help you understand the limitations of your Medicare plan and help you make decisions around healthcare and finances. Call us to discuss the issue of nursing home care, and we’ll discuss plans for your future.