Editor’s Note: Journalist Philip Moeller is here to provide the answers you need on aging and retirement. His weekly column, “Ask Phil,” aims to help older Americans and their families by answering their health care and financial questions. Phil is the author of the new book, “Get What’s Yours for Medicare,” and co-author of “Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security.” Send your questions to Phil.
Bettyrose – United Kingdom: I’ve been living in the U.K. for over 20 years and just turned 65. I understand I should sign up for Part A, but do I also need to sign up for Part B if I’m living outside the U.S.? There is always an outside chance that we may end up back home in Chicago. Also, I am still working and plan to retire in October. We have socialized medicine here in the U.K. I did some reading, but it’s somewhat confusing.
Phil Moeller: People who turn 65 and don’t get Medicare can face potentially steep late-enrollment penalties when they finally get around to signing up. However, those who are actively employed and have group health plans, often referred to as GHPs, do not need to sign up for Medicare until they leave their jobs, regardless of their age. I have always assumed that these qualifying health plans needed to be in the U.S. After all, Medicare doesn’t cover people outside the U.S., so I figured its rules about group health plans did not apply to foreign-based health insurance.
Wrong! I should have followed my own number one Medicare rule: Never assume!
According to the Centers for Medicare & Medicaid Services, so long as a person’s health insurance qualifies as a group health plan, they need not get Medicare at 65 regardless of where they live or who provides their health insurance. When they do retire and leave their plan, they will have an eight-month special enrollment period during which they can sign up for basic Medicare and any other Medicare policies.
“A GHP does not have to be in the United States, and the individual (or spouse/family member for disabled) is not required to be working in the United States,” a spokesman explained, citing an agency webpage explanation. “CMS considers a person working for a foreign employer who has a plan that meets the definition of a GHP to meet the requirement for GHP coverage. This also applies to individuals working in countries with national health plans.”
So if you have a GHP with your current employer, the odds are good that you don’t need to worry about getting Part B right now. Again, do not assume this is the case. The Social Security Administration, which administers many Medicare rules, has an explanation of what it takes to qualify as a GHP.
Here’s an excerpt:
A GHP is any plan of, or contributed to by, one or more employers to provide health benefits or medical care (directly or otherwise) to current or former employees, the employer, or their families. The term GHP applies to the following types of plans:
- self-insured plans,
- plans of governmental entities (Federal, State, and local),
- employee organizational plans (e.g., union plans or employee health and welfare funds),
- employee pay-all plans (i.e., plans that are approved or sponsored by the employer or employee organization, but receives no financial contribution from them), and national health plans in foreign countries.
I suggest you touch base with the employee benefits office at your employer and raise this issue. Please let me know how you fare, particularly if you are told that your current plan does not qualify.
Aimee — Pennsylvania: How can I find out the best way to submit a covered service so that it is considered eligible for coverage by insurance, Medicare or otherwise? For instance, if my mother will need some type of durable medical equipment, or DME, after a surgery, what is the best way to find out how to get that DME covered? I have found that calling the insurance company with the question, “What is the best way to get XYZ covered?” is usually met with silence, a few fumbling words and no answer.
Phil Moeller: My comments deal only with people on Medicare. Keep in mind that to be covered, durable medical equipment must be prescribed by a doctor or other licensed health care professional as medically necessary.
Your mother’s doctor’s office should have a good handle on whether a piece of equipment is covered. Also, Medicare has an online tool to help people learn if an item of durable equipment is covered.
If your mother’s Medicare coverage is government-provided Medicare — Parts A and B and not a Medicare Advantage plan — there are four DME contractors around the country who handle these claims. Claims in Pennsylvania are processed by a government contractor named Noridian Healthcare Solutions.
If she has a Medicare Advantage plan, her claims would be handled by the private insurance company that provides this coverage.
While your experience with insurance companies is hardly unique, getting an advance read from either Noridian or a Medicare Advantage insurer is the best thing you can do.
I’d call your mom’s doctor’s office and get whatever technical language you need to describe the equipment it wants to prescribe for her. In an ideal world, the doctor would submit the claim. But you also should get ready to spend time on hold as you navigate whichever Medicare phone maze is involved with her coverage.
Karen – Virginia: My Social Security benefits when I apply — I am 63 and plan to wait until age 70 — will be more than twice what my husband will get when he applies for his benefits. Would it be unwise to have him, at age 66, go ahead and receive his monthly benefit now? Am I correct in understanding that when I die he can then receive my larger spousal benefit? Is it correct that he will lose his benefit anyway when he starts to receive the spousal benefit as a widower? So why not have him receive his monthly Social Security payment now which will add a nice chunk to our income?
Phil Moeller: If your husband also waited until age 70 to file for his own retirement benefit, his monthly payment would be 32 percent larger than if he filed at age 66. Of course, he would have foregone four years of benefits by delaying. The value of this deferral depends, in practical terms, on your need for current income, his health and your sense of how long you will live.
As you suggest, your death would entitle your husband to a survivor benefit (not a spousal benefit) equal to whatever you were collecting (or were entitled to collect) when you died. If this is larger than his own retirement benefit, he would receive what’s called an excess survivor benefit. It would equal the amount by which his survivor benefit exceeded his retirement benefit.
I’d play with the numbers and see if any combination of filing options and claiming dates stands out as the best choice for you. If you haven’t already done so, sign up for online Social Security accounts so you can see what your benefits would be at different claiming ages.
John: My wife (retired and on Original Medicare) has employer insurance and a drug plan via her retirement plan. For me to remain covered by the employer insurance and drug plan, I also need to be on Original Medicare. If she predeceases me, will I be penalized for not getting a Medigap or Part D plan when I became eligible earlier this year?
Phil Moeller: You already face such penalties, regardless of what happens to your wife.
The clock starts ticking on the Medigap and Part D enrollment periods once you lose active employer group health insurance or turn 65, whichever occurs later. The key word here is “active.” Employer retiree health plans are not considered active coverage. Once you obtain Original Medicare, you then would sign for additional coverage — a Medicare Advantage plan (usually including a Part D drug plan) or perhaps a Medigap plan.
There is a late-enrollment penalty of 1 percent a month for Part D. There is no late-enrollment penalty for Medigap, but there is guaranteed access to Medigap on favorable underwriting terms during its initial enrollment period. Once this period has ended, you may wind up paying more for a Medigap policy, and insurers in most states are not even required to sell these plans to you.
Of course, if you will have access to your wife’s retiree plan for the rest of your life, then failing to get a Part D plan would not affect you. However, your question makes me think that you will no longer be covered by your wife’s retiree health plan if she dies.
If this is the case, you could consider buying a Part D plan now to avoid penalties later on. With an average monthly premium of $40, waiting five years would incur a monthly penalty of $24 (60 percent of $40). Your need to balance this against the premiums you’d be paying for coverage you don’t appear to need right now. For example, paying $40 for five years would set you back $2,400. It would take you 100 months (eight and a third years) before that $24 monthly penalty would leave you worse off than not getting a Part D plan right now. If you bought a cheaper plan, the trade-off numbers would shift.
If your wife’s retiree plan permits you to have a Medicare Advantage plan instead of Original Medicare, you might consider a Medicare Advantage plan that includes Part D. There are some very inexpensive Medicare Advantage plans. While they may not provide robust insurance protection, they would help you avoid late enrollment penalties.
Buying a Medigap plan now is, in my view, an expense that is unlikely to be “paid back” by avoiding higher Medigap premiums should you later want to get a plan. In your case, a Medicare Advantage plan might make more sense. It also offers out-of-pocket limits on your spending, which is the major benefit of Medigap. And unlike Medigap, Medicare Advantage insurers must sell you a plan and can’t charge you higher rates due to late enrollment.