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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; and he will answer as many as he can.
Joy – Mass.: I am slightly past full retirement age and work full-time with excellent health care. It is my understanding that I can continue to work plus collect my full monthly Social Security. My questions are: If I opt to start taking the Social Security now, rather than delaying and getting 8 percent annual increases until I’m 70, do I have to sign up for and start paying for Medicare, too? When I do retire and require Medicare, how do I pay for it? I am so confused and anxious about timing and choosing the right Medicare options (even though I am an over-educated, well-informed, fully employed person).
Phil Moeller: By law, when you claim Social Security you also will be enrolled in Part A of Medicare. Part A, which covers hospital expenses, charges no premiums and can come in handy as secondary coverage to your employer plan. However, people with health savings accounts must stop tax-free contributions to their accounts once they are receiving Medicare. So, if you have an HSA, this could be a big negative.
When you do sign up for Medicare, your Part B premiums must, by law, be subtracted from your Social Security payments. Any premiums for private Medicare policies — Part D drug plans, Medicare Advantage, and Medigap supplemental plans — can be paid by you directly to those insurers. However, some people also elect to have their Part D premiums paid out of their Social Security benefits.
By the way, my Medicare book is perfect for over-educated and well-informed people!
Elizabeth: I married when I was 20, and quit college to help my husband through law school. Our marriage lasted 21 years, I have not remarried, and now am approaching the age of 62. Where do I find out what is best for me with Social Security?
Phil Moeller: The short answer is that you generally can receive the larger of any Social Security benefits to which you’re eligible. In this case, those benefits are your own retirement benefit and an ex-spousal benefit based on the earnings of your former husband.
While you are eligible for both these benefits at age 62, the amount of your benefit will increase if you defer claiming it. Here are details about early claiming reductions and delayed retirement credits.
Also, benefits claimed prior to reaching full retirement age may be temporarily reduced or even eliminated by Social Security’s earnings test.
If you open an online My Social Security account, you can find out how much your own retirement benefit would be at different claiming ages. You may not be able to gain access to the earnings record of your former husband.
A Social Security representative may be able to help you obtain that information, but you should be careful that you do not actually apply for any benefit until you have all the facts.
The long answer to your question is that you should read the revised edition of our Social Security book to understand ex-spousal benefits and how they can best be used in combination with your own benefits.
Gene – Okla.: I have COBRA due to my husband’s retirement in 2016, and it will extend through the end of this month. I turned 65 last summer, had already met all of my out-of-pocket expenses, and wanted to remain on COBRA until the end of last year, December 31, avoiding changes of insurance and new deductibles. My COBRA insurer initially told me that as of 65th birthday, its policy would be secondary to Medicare Part A, but would still be my primary for any Part B charges and drug prescriptions. However, they stopped paying my claims, and when I called, they said that what they first said was incorrect, and that they would be paying secondary on any medical claims! Since I didn’t have Part B at the time, shouldn’t they have still been the primary payer for those charges?
Phil Moeller: I am sorry you got such confusing and poor advice.
The “gotcha” here that trips up lots of people is that COBRA is not considered employer insurance in terms of when you need to sign up for Medicare. As a result, COBRA policies may not be required to provide primary insurance coverage when people without active group insurance turn 65.
So, you needed to enroll in Medicare when you turned 65. This initial enrollment period would have begun in May, which is the third month before your 65th birthday month. If you had enrolled then, your coverage likely would have taken effect by your birthday, and you would have faced no problem.
By waiting until later to enroll in Medicare, your effective date for coverage was extended into this year. While this filing date is in compliance with Medicare rules, it does mess up your coverage under COBRA’s Medicare rules.
You could try to push back on your COBRA insurer and argue that inasmuch as you are in compliance with Medicare’s enrollment requirements, your COBRA policy should remain primary until your Medicare coverage becomes effective. However, I wouldn’t be surprised if they don’t see it that way.
The State Health Insurance Assistance Program (SHIP) provides free Medicare counseling, and might have some suggestions for you. If you do get some relief from this situation, please let me know.
Madelyn – Mich.: Does Medigap provide coverage if you are traveling abroad? Also, I receive Medicaid from Michigan, and we only have income of $767.00 from my husband’s Social Security and rental income of around $1200 per month. Shouldn’t Medicaid also pay for his Part D drug plan?
Phil Moeller: Some Medigap plans cover care for emergency medical expenses when traveling outside the U.S. You can find details on page 11 of Medicare’s annual guide to Medigap plans. If you think one of these plans makes sense, I’d urge you to call the insurance company before buying the policy to understand exactly what the policy covers. For someone who has had Medicare for more than six months, finding an affordable Medigap plan can be challenging.
As for Medicaid, I can’t really say whether it should cover some or all of his Part D costs. Medicaid rules are set at the state level, and I’m not an expert on individual states. The State Health Insurance Assistance Program (SHIP) provides free Medicare counseling and should have someone familiar with Michigan Medicaid eligibility rules.
Mark: Is there a source that provides the history and future of Medicare Part B premium and Part B deductible increases? Also, is there a health insurance industry source that provides the average historical and future cost increase for Medigap letter plans F, G and N?
Phil Moeller: I hope one out of two is okay!
Social Security has a full history of Part B premiums and deductibles in its annual statistical supplement. The most recent summary I can find is for 2015. Look for table C.21 on this page.
Last year, the Centers for Medicare & Medicaid Services took over this function. Their data is awful — opaque, unavailable, or incomplete — and I fear this is by design. Helping consumers understand the benefits program that is so central to their lives does not, in my humble view, have much standing at CMS.
As far as Medigap plans are concerned, I share and applaud your goal. However, I have never seen this data, although I know that insurers keep track of such things.
One problem is that Medigap rates are filed at the state level, so there is no national average, and if there was, it wouldn’t be terribly useful in making an informed purchase choice within a specific state.
The other problem, of course, is that CMS is not the only one not so big on consumer transparency. State insurance regulators and insurers aren’t so big on it, either.
Apologies for the rant. It’s just that the information you want should be so easy to get, yet it is very, very hard.
Valerie – Ala.: I’m currently on my husband’s Blue Cross Blue Shield federal plan. I’m already retired and will be turning 65 soon. Do I have to sign up for Medicare? Our insurance coverage is pretty good but I’m wondering if having Medicare would help later. I’m really confused.
Phil Moeller: Normally, you do not have to sign up for Medicare when you turn 65 and can just keep your federal plan. However, if you later change your mind and want Medicare, you might pay sizable late-enrollment penalties (10 percent of your Part B premium for each year you are late in enrolling).
There is no question that having Medicare can improve your coverage. The issue is whether the improved coverage is worth the additional cost of Medicare. If there’s a simple answer to this question, I’ve never seen it.
My advice, for what it’s worth, is to take some possible health issues and see what their out-of-pocket costs would be with and without Medicare. I’d include a knee or hip replacement, a common form of cancer (yes, I agree it’s awful to have to even contemplate such a thing), or a stroke that included a long hospital stay. Then, depending on your personal aversion to risk, you can decide whether or not to add Medicare to your federal retiree plan and, if so, what package of Medicare policies you want.
Peter: I am a volunteer counselor for SHIP (the State Health Insurance Assistance Program). I very much appreciate having your Medciare book available when complex questions arise. You often refer people to SHIP in your column, but today I need your help!
My client and her husband are both 78 and are about to retire. After they turned 65, they both signed up for Part B, even though they had creditable employer coverage. During this time, their employer coverage was primary and no expenses were charged to Medicare. After a few months of paying for Part B, they decided to drop it in order to save the expense. Now that they are finally getting ready to retire, my client is concerned that both she and her spouse will be hit with very significant penalties when they re-enroll in Part B.
Phil Moeller: So long as they can get their current employer to certify they have had employer coverage continuously since becoming eligible for Medicare, they should not face any re-enrollment penalties or problems.
Renee – Colo.: I am debating switching my Part D drug plan from United Healthcare to Silver Script. I can have my prescriptions filled locally at my regular pharmacy, and my out-of-pocket costs will be less. Do you have any experiences with SilverScript and whether it’s reliable?
Phil Moeller: These are both well-established drug plans. Here is a recent study of 2018 Part D plans that compares popular plans, including SilverScript plans.
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: email@example.com.