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.
William: I took Social Security benefits early in 2014 when I was 62. At the time, my daughter was 15, but Social Security did not ask me if I had a minor child. I did not realize she was eligible until I read an article. I called Social Security, and they said our family was only eligible for six months of retroactive benefits and not the 36 months I think we should receive. I was wondering if you knew how I could get help in getting these back benefits?
Phil Moeller: I would like to tell you that you can get all the past benefits you feel you deserve. Unfortunately, Social Security is not legally responsible for telling you about its rules and benefits. The burden is on you to know these rules as impossible as this may be.
You can file an online appeal, but citing the agency’s failure to tell you about benefits for your daughter is unlikely to be a compelling reason for the agency to change its decision. Having said this, I urge you and anyone else in this situation to appeal, to complain and to copy the offices of their elected representative in Washington.
What good is providing benefits if no one knows about them!
Patrick – Illinois: I turn 65 in August. I am currently employed with great insurance. However, I want a particular treatment that is covered by Medicare but not covered by my current carrier (because it’s more expensive than other available treatments). I need to keep my employer insurance, because it covers my 61-year-old wife, who has no other access to health insurance. I’m thus wondering what happens if I sign up for Medicare Part B, have the procedure and then drop Part B. Are there any penalties now or in the future for doing so?
Phil Moeller: As you might know, Part B pays only 80 percent of covered expenses. So the first thing I would suggest is that you consider how you would be paying for that other 20 percent. Would your employer plan become a secondary insurer for this treatment? Would you get a Medigap supplemental policy? Would you pay the 20 percent out of your own pocket?
Narrowly defined, you can drop Medicare the day after you’ve received all the care you are seeking from this treatment. In the real world, however, I wouldn’t drop it until you are sure it has covered its share of the treatment’s expenses. Given the often long lag time between a procedure and Medicare’s payment and record-keeping, this might take several months. Whether paying premiums during this period is worth it to you would depend on the cost of the treatment and the “hassle factor” of dealing with any payment disputes once you’re no longer on Medicare.
Because you will be keeping your employer insurance, Medicare should not hit you with any late enrollment penalties if you get it, drop it and then later get it again. Once you retire or otherwise lose access to the employer plan, you will have a special enrollment period to get Medicare without facing late enrollment penalties.
As for your wife, have you considered that she can get guaranteed health coverage from your state Obamacare exchange? This might be cheaper than keeping your employer plan. If you also left the employer plan, of course, you’d probably want to keep Medicare.
Tommy – Mississippi: I am getting Medicare and have been considering a Plan F Medicare supplement policy. I have read that it will be altered or discontinued in 2020. If I elect Plan F in 2018 and it is altered or discontinued in 2020, will I continue in the plan with the same benefits available to me as in 2018? Will Plan F go into a death spiral with ever increasing premiums, ultimately forcing participants to leave? Can I change plans in 2020 or later regardless of health?
Phil Moeller: In 2020, Plan F plans sold to new purchasers will no longer be able to cover the annual deductible for Part B, which is $183 this year. If you buy a Plan F policy before then, you would be able to renew it, and it would continue to cover the Part B annual deductible. However, as you suggest, if this provision causes fewer new enrollees to purchase Plan F policies, it could have a negative impact on existing Plan F policyholders.
I have been advising people to consider purchasing Plan G policies. Plan G covers everything that Plan F covers except for the Part B deductible. And the last time I checked with a broker, Plan F annual premiums were far more than $183 and higher than Plan G premiums.
You are free to change Medigap plans every year during open enrollment. However, you would no longer enjoy the guaranteed issue rights available to new Medicare enrollees. These rights require insurers to sell Medigap policies without raising rates due to a person’s pre-existing medical condition or age. Once this period has passed, it can be difficult to find a policy or to find one at an attractive price.
Jim – New York: I would like to begin Social Security benefits at age 64. I am worried that income from stock options I have received would count as wages. Because I have not yet reached full retirement age, would Social Security reduce my benefits?
Phil Moeller: My reading of Social Security’s official rules is that stock options would not count as wage compensation for purposes of calculating whether your earnings would be subject to the earnings test.
Joe – Michigan: I’m 66 years old. Do I have to have Medicare? Why would I have to pay for that? Can’t I just get Medicaid?
Phil Moeller: For those 65 and older, Medicaid is only available to people who have Medicare. So, you must apply for Medicare if you want health insurance. When you do, you would be judged eligible for Medicaid if your income and financial resources were small enough. These rules are set on a state-by-state basis. Free Medicare counseling is provided by the State Health Insurance Assistance Program (SHIP). I suggest you contact a Michigan SHIP office and see if someone there can help you apply.
Kurstin: My father has Medicare and is living in Singapore. He was diagnosed with a brain cancer and has been receiving treatment there with the intention of coming back to the United States for further treatment. However, his cancer has progressed, so he’s not allowed to fly to return to the United States. He is getting close to needing additional medical assistance and possibly hospice. Would Medicare cover the cost if he’s in Singapore? We are very confused and at a total loss for next steps.
Phil Moeller: I am sorry to hear about your father’s illness. Unfortunately, I do not believe Medicare’s hospice benefit would be available to someone who was not in the United States. I wish I had better news.
Tom – Florida: I am 65, covered by health insurance at work and have decided not to get Medicare at this time. However, when I do enroll later, I wondered if the costs would be higher than if I’d enrolled when I turned 65?
Phil Moeller: The Part B premium is the only part of Medicare that charges less to some earlier enrollees. This is due to Social Security’s “hold harmless” rules, which are explained here. However, these rate differences should disappear over time.
It’s also possible that a 65-year-old purchaser of a Medigap supplement plan might pay slightly less than a new 66-year-old enrollee a year later.
There is no “early bird” edge for purchasers of Medicare Part D drug plans or Medicare Advantage plans. All similar purchasers pay the same premiums and any year-over-year changes in these plans are applied to all policyholders.
Even with the possible differences in Part B and Medigap premiums, they are not large enough to justify paying an entire year’s premium for a product you don’t need.
Chris: I’m 55, and my wife is 44. We have two children, ages 12 and 18. I understand that if I die prior to my youngest turning 18, any minor children will get benefits until they’re 18, and my wife would get benefits for caring for them. Is this right? There seem to be so many scenarios here that it’s easy to get confused.
Phil Moeller: Your understanding is correct, but you should keep in mind that individual benefits to three people based on one person’s Social Security earnings record – yours in this case – are likely to be reduced because of Social Security’s family maximum benefit.
Jeffrey: I’m trying to figure out if I earn enough money to be required to pay Medicare’s high-income surcharges? I understand these surcharges are based on something called modified adjusted gross income, or MAGI. But I need help in figuring out how to calculate it.
Phil Moeller: Social Security often does this — tossing out a concept but then failing to provide a detailed definition.
Here is a definition of MAGI that I found on an IRS webpage. It was dealing with education tax credits and not Medicare surcharges, but the definition shouldn’t change:
MAGI for most people is the amount of AGI, or adjusted gross income, shown on your tax return. On Form 1040A, AGI is on line 22 and is the same as MAGI. If you file Form 1040, AGI is on line 38 and you add back the following:
- Foreign earned income exclusion
- Foreign housing exclusion
- Foreign housing deduction
- Income excluded as bona fide residents of American Samoa or of Puerto Rico
If you need to adjust your AGI to find your MAGI, there are worksheets in the Publication 970 to help you.
Notice that the IRS even fudges here when it says this is the definition for “most people.” No wonder we have so many tax lawyers!