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Why later enrollment in supplemental Medicare can cause problems

“Ask Phil,” aims to help older Americans and their families by answering their health care and financial questions. 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.

Timing of Medigap enrollment is important

Pam – Mississippi: I am a healthy 65-year-old. I take no drugs, have never been in the hospital and never had surgery. But I have signed up for basic Medicare A and B plus Part D to cover drugs, simply to avoid paying any penalties at a later date. Should I add a Medigap policy during this enrollment period? Are there also penalties involved if you do not sign up for Medigap insurance right away but potentially add it in five years or so if you have health issues? What kind of plan would be best for me?

Phil Moeller: Medigap insurers must provide you policies and their lowest rates during the six-month period after you enroll in Part B. After that, insurers in most states can charge you higher rates for preexisting conditions and even decline to sell you a policy. This doesn’t always happen, but it can. The Kaiser Family Foundation has done a state-by-state review of these rules.

The best plan for you depends on how much you have to spend and how comprehensive you want your Medigap plan to be. It’s great that you’re in good health now, and I’m sorry to be a downer here, but Medicare choices should be driven by the likely health needs of the “future” you. For nearly all of us, that means more health issues, more doctors and more meds.

There is a solid Medicare guide to Medigap supplement plans that I recommend you read.

Peggy: I currently have a Medigap Plan F policy and understand that while I can renew this plan next year, a change in U.S. laws will close these plans to new Medicare enrollees. So, I am thinking about switching to Plan G. It covers everything that Plan F covers except the annual Part B deductible, and it’s cheaper than my F plan, even after taking into consideration that I will have to pay the annual deductible myself.

Are there any drawbacks at all from changing plans? I believe, from reading your columns, that it is fairly easy to create unintended consequences, so I would greatly appreciate your thoughts. Thanks for your column (and, of course, your book, too).

Phil Moeller: As I told Pam, once you’ve had your Medigap plan for more than six months, insurers in most states are permitted to consider any preexisting health conditions, charge higher rates and, in some cases, even decline to offer to sell you a policy. It’s important to call around before you drop your current policy and make sure you can get a new plan on reasonable terms.

Medicare, employer insurance or both?

Carmen – Indiana: My wife is receiving Social Security and will soon turn 65. Do I need to sign her up for Medicare or is that done automatically? Also, I am still working full time, and my wife is under my medical insurance. Would she use Medicare and my coverage, or do I drop her from my insurance when she’s 65?

Phil Moeller: Medicare enrollment is not automatic. Your wife can get Medicare if she chooses, but if your employer has more than 20 people, she will be able to stay on your coverage when she turns 65 and will not have to get or pay for Medicare. In that case, she would later enroll in Medicare when you retire or otherwise lose access to your employer coverage.

She also might be able to take Medicare instead of your employer coverage and would not have to pay those employer premiums. So many people ask me about this decision that I wrote a story about it. After reading it, let me know if you still have questions.

Getting additional Medicare coverage

Darrell – Virginia: I am disabled, age 63 and I pay $150 per month for medical and prescription drugs. How do I add hearing, dental and vision?

Phil Moeller: Many private Medicare Advantage insurance plans offer these benefits, whereas just having original Medicare with Parts A and B does not include them, which you seem to already know based on your question.

The Medicare annual open enrollment period won’t begin until October, so it can take time for you to switch to a new Medicare Advantage plan. Still, I suggest you use Medicare’s online Plan Finder tool to look for those plans sold near where you live. If you find one or more that you like, call the plans and ask about enrollment timetables.

Alternatively, you could keep your current Medicare and look for stand-alone plans from private insurers. These plans likely would cost you more money than getting a Medicare Advantage plan that included these benefits.

Help! I’m still confused

Michael – New York: I lent your Social Security book to someone where I used to work. Forget about getting it back!

Here is the question: I am 73; my wife just turned 66. We both work full time. She wants to apply for her spousal payments on my account and postpone her collection until she reaches 70. She contacted Social Security. She was told that they have to check how much her entitlement is compared to mine before they can approve her spousal share. Is this appropriate? Shouldn’t she just be able to collect without the rigmarole?

Phil Moeller: There is no law against buying another book! But seriously, Social Security is wrong here. Your benefit has no impact on hers in this situation (other than it being the basis for her award). Here’s the agency’s own explanation of her filing options.

Glenn: There seems to be widespread confusion concerning the earnings test for this year when I reach my full retirement age. One day, an online legal “expert” or Social Security hotline call center employee will tell you the limit is $3,910 per month maximum earnings, month by month, in each month leading up to my FRA month (September). The same two sources a day later will say the earnings limit cannot exceed (in the aggregate) $46,920 in those same pre-FRA months. Even the literature on the official Social Security web site contradicts itself. This is very disconcerting to someone trying to make plans, the consequences of which are permanent! Does anyone know what the heck is going on?

Phil Moeller: What! Social Security’s information is not clear? I’m shocked!!

Seriously, my read of the official earnings test web page leads me to believe that the $46,920 figure is the one that’s important.

It does not mention $3,910. The reason why, in my opinion, is because of this sentence in the page:

“This higher exempt amount applies only to earnings made in months prior to the month of NRA attainment”

So, you could earn $46,000 through August and still be under the earnings test limit when you reach your FRA in September.

David: I am 61, a widower, and would like to file for widower’s benefits. But if I do that before my full retirement age, will that permanently reduce the benefit amount that I receive, or does that amount reset each passing year until it reaches the maximum benefit amount?

Phil Moeller: Unfortunately, early filing reductions are permanent.

Anonymous – Denver: Can you recommend a lawyer or other advisor for Social Security disability questions? My husband has very aggressive terminal multiple myeloma. He is now unable to care for himself, and we have a 13-year-old daughter. We don’t know what is available to him now, or for our daughter and me when he dies.

Phil Moeller: I’m so sorry to hear about your husband’s health. Unfortunately, I don’t recommend private attorneys or any other private advisers. I simply can’t know enough to be comfortable doing so.

I don’t know his age or yours, but you should explore whether he should apply for disability (if he’s younger than 62) or regular retirement benefits (if he’s 62 or older). Has your husband applied for disability? He should do so right away.

The issues here include how long he has to live, and whether you will be dependent on his Social Security when he dies. If he is eligible to file, your daughter will also be eligible for benefits based on his benefit.

We review these claiming details in our Social Security book, but I’d suggest you speak with a Social Security representative to find out more information about your options. While Social Security makes lots of mistakes (for which I regularly zing them) most people want to do the right thing and try to help.

Please let me know what you learn. I am here to answer specific questions if they come up.