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Journalist Philip Moeller answers your questions about health, aging, and retirement. Phil is the author of the 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.
Eleanor – New York: I have a special-needs nephew who is disabled and receiving Social Security disability payments. His group home signed him up for Medicaid, but the services are limited. How can he also get Medicare as some others in the same home have? He is 43 and has never been employed. Medicaid said he is eligible but sent me to Medicare. Medicare sent me to Social Security, and they sent me back to Medicare.
Phil Moeller: It sounds like your nephew is one of more than 10 million Medicare enrollees who are also eligible for Medicaid. He should have been eligible for Medicare about two years after being approved for disability payments. These dually eligible individuals are normally enrolled in Medicaid because their incomes are low enough to qualify.
I am not sure what Medicare services you think he is being denied, but he could always qualify for them by paying Medicare’s regular premiums. If you wish, please tell me the specifics of what care he needs that he is not receiving.
As for his group home, I’m not sure if you know this, but Medicare does not cover care in such homes; Medicaid does. I’m assuming this is why the home has identified him as a Medicaid recipient. Also, Medicaid rules are set at the state level, so if the benefits he is receiving are modest, this may be due to state rules. You can check with his state’s Medicaid agency.
Lastly, if he has never been employed, he would not have earned enough Social Security work credits to qualify for disability payments on his own. I’m thus assuming his payments are based on one of his parent’s Social Security earnings records. Finding out these details could help in discussing his situation with Social Security, which as you probably know, also administers Medicare enrollments.
Bob: We have been told that if we have our daughter on a quit-claim deed for five years, our house would not be subject to being taken over by Medicare if either of us goes to a nursing home. Is this true?
Phil Moeller: Medicare does not “take over” a person’s home. The issue that arises is whether the value of a person’s home is large enough to make them ineligible to qualify for Medicaid, which can cover a person’s stay in a nursing home. If a person sells or transfers his home to a third party to hide assets and avoid this disqualification, Medicaid usually uses what’s called a “look back” period of five years to judge whether such a sale will affect Medicaid eligibility. Because Medicaid rules are set at the state level, I suggest you get in touch with your state’s Medicaid office and find out what rules would apply to you. You also should consult with an attorney familiar with Medicaid and real-estate law in your state.
Ruth – California: I understand that profit from the sale of your home affects income, which, in turn, can result in a surcharge for Medicare premiums. But does it make any difference if you immediately put all or part of that income into the purchase of another home? Also, is the surcharge in effect for two years until the tax cycle returns you to your lower income? These surcharge rules seem to make “downsizing” very expensive for seniors.
Phil Moeller: Medicare’s high-income surcharges are based on taxable income. So, the answer to your question depends on whether the proceeds from the sale flow through to you as taxable income. I am not a tax expert, but I believe people have a one-time exemption that permits them to sell their principal residence without adverse tax consequences. And if you roll over the proceeds from your old home into a new one, only the net amount of the gain on the sale of your prior home would be taxable. You should confirm my advice with a tax accountant.
Also, the high-income surcharge lasts only for one year. For example, someone with high income in 2019 would see this reflected on their tax return filed in 2020 and would pay the surcharge during 2021. If their income declined in 2020, the surcharge would disappear in 2022.
Steve – Florida: Social Security is taking too much out for Medicare in 2019. They are basing it on my 2017 tax return when I sold real estate, which boosted my income to the MAGI (modified adjusted gross income) range of $135,500-$160,000. I also sold real estate in 2018, putting me in the same MAGI range. However, for 2109, my MAGI range is $85,000-$107,000. How do I get Social Security to correct this?
Phil Moeller: As I indicated to Ruth above, there’s a time lag here. Your 2018 income as reported on your tax return in 2019 will determine your 2020 Medicare premiums. If your income declines this year, it should automatically reduce your premiums beginning in 2021. The lag is related to how long it takes Social Security to receive complete tax-return records from the IRS. People with life-changing events can get same-year relief from the surcharge, with the most common event being retirement and the loss of wage income. A spike in income due to selling a piece of real estate does not quality for such a waiver.
Ken – Georgia: I will be turning 65 next March. How long can I wait to enroll before there is a penalty? Currently, I am on Obamacare, and it is working fine for me.
Phil Moeller: There is a seven-month initial enrollment period that ends three months after the month you turn 65. My larger concern about your timing is that your Obamacare may not continue providing primary coverage to you once you are eligible for Medicare. I would check with your insurer ahead of time and make sure you don’t get an unpleasant surprise.
Robin – Texas: I live in Texas. If I visit Alabama, will my Medicare be in effect there?
Phil Moeller: It depends on the kind of Medicare you have. Original Medicare (Parts A and B) is good anywhere in the country. However, if you have a Medicare Advantage plan, it most likely will only cover you where you live in Texas. A good rule of thumb here is that if your Medicare is provided by a private insurer, check with them about coverage rules.
Phil Moeller is the author of “Get What’s Yours for Medicare: Maximize Your Coverage, Minimize Your Costs” and the co-author of the updated edition of The New York Times bestseller “How to Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security,” with Making Sen$e’s Paul Solman and Larry Kotlikoff. On Twitter @PhilMoeller or via e-mail: firstname.lastname@example.org.
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