Getting started in signing up and enrolling in Medicare can be a daunting task. There are many resources available to point you in the right direction, but this guide can act as an overview around different commonly asked Medicare topics.
The image below speaks to the process of signing up for both Part A and Part B on Medicare.gov. It shows the two common tracks of deciding if you want Original Medicare or a Medicare Advantage/Part C plan.
1 Medicare does pay for medically necessary skilled nursing facility or home health care with strict requirements that are difficult to meet on a limited basis and for some hospice care. If you transfer assets to others there is a five-year "lookback" where the government will recover the assets transferred if you go on Medicaid. This is not personal advice. Consult an eldercare attorney if you have questions. Source: Medicare.gov as of December 31, 2021; J.P. Morgan Asset Management analysis.
Who is eligible for Medicare?
Individuals who have paid Medicare taxes for 10 years (and their spouses who are age 65 or older) are eligible for Medicare at age 65.
When do I enroll in Medicare?
You enroll during your initial enrollment period which is 3 months before to 3 months after your 65th birthday month.
Are my Medicare selections changeable?
Yes, every year during open enrollment from October 15th through December 7th you can change your choices.
What if I am still working at age 65 - do I need to enroll in Medicare?
The image below helps to guide you through the employer benefits you have and see a path forward depending on your situation. Making sure you understand how your health savings account integrates with Medicare is important since contributions to it can create tax penalties.
1 Assumes Part A is no cost (generally for people who paid payroll taxes for 40+ quarters or are married to a beneficiary who did so). Some individuals may choose to sign up for Part A and Part B earlier than shown if they want additional coverage.
2 Ask your employer for documentation or credible coverage for major medical and for drug coverage. Employer coverage for less than 20 people is usually not credible and will end at age 65 or become secondary after Medicare has paid.
3 To disenroll you must have an interview with the Social Security Administration and use Form CMS 1763. When you sign up for Part A again or sign up for Security Security, coverage may be retroactive for up to 6 months. You will be unable to disenroll if you are receiving Social Security.
4 Total HSA contributions for the year in excess of the maximum contribution for the year divided by the number of months you are eligible to make contribution will result in tax penalties (6% of the excess contribution each year). This is not intended to be individual tax advice, consult your tax professional.
For more information, see www.mymedicarematters.org/enrollment/am-i-eligible, sponsored by the National Council on Aging. Source: IRS Publication 969, National Council on Aging and Medicare.gov websites as of December 31, 2020; J.P. Morgan Asset Management analysis.
How much does Medicare cost?
Medicare Part A does not have an ongoing premium cost, but you do have deductibles and coinsurance. The Medicare Part A premiums are typically paid through payroll taxes during your working years. Medicare Part B and Medicare Part D both have monthly premium costs. The 2023 Medicare Part B premium is $164.90 per month per participant. The average 2023 Medicare Part D premium is $31.50 per month per participant.
If you have a higher income in retirement do you pay more for Medicare?
Yes, if you have a higher Modified Adjusted Gross Income (MAGI) than the annual thresholds you will have to pay an additional monthly premium for Medicare parts B & D. The image below illustrates how the 2020 tax filing year's MAGI is used to determine the additional monthly premium amount on top of the standard monthly amount.
1 The Social Security Administration uses the most recent federal return supplied by the IRS. If you amended your return in a way that changes your surcharge amount, you may need to contact your Social Security office. Source; Medicare.gov as of December 7,2021. This is not meant to be personal tax advice. Please consult your tax professional for specifics for your situation. Modified Adjusted Gross Income (MAGI) for purposes of calculating Medicare surcharges is Adjusted Gross Income (AGI) plus tax-exempt interest income. Thresholds increase each year with inflation starting in 2020, except the top threshold, which was added in 2019; this top threshold is set to annually inflate starting in 2028.
How Medicare Works
Medicare is a government mandated healthcare program funded through payroll taxes as well as ongoing monthly premiums. Both employees and their employers pay 1.45% of the employees wage into the system annually. That money is most commonly thought to pay for Medicare Part A which covers hospital care and doesn't require ongoing premium payments in retirement.
Medicare Part B and Part D both have monthly premiums once enrolled. Medicare Part B covers outpatient care such as doctor visits, and Medicare Part D covers prescription drugs. You can also get a Medicare supplement that helps to fill in some of the gaps in coverage for what Medicare Part B alone covers.
Medicare Part C, also called Medicare Advantage, is a program that in essence replaces both Medicare Part B & C which has given it the street name of a Medicare replacement plan. These programs operate under different insurance HMOs and have different offerings than Original Medicare Part B and Part D.
What are the 3 important eligibility criteria for Medicare sign up?
Being age 65 or older, being a US resident, and being either a US citizen or being an alien who has been lawfully admitted for permanent residence and has been residing in the United States for 5 continuous years prior to the month of filing an application for Medicare.
Can everyone get Medicare at 65?
Only people who are eligible and registered can get Medicare Part A without a monthly premium. If you are not eligible, you may be able to pay a monthly premium to get Medicare Part A. The 2023 Medicare Part A premium is $506 per month.
Can I get Medicare at age 62?
Generally speaking, you cannot get Medicare until age 65. There are some situations that can allow for Medicare eligibility and enrollment prior to age 65 and those would include being on Social Security disability, being a widow or widower, having End-Stage Renal Disease, or having ALS.
Is Medicare age changing to age 67?
While there have been reports and congressional proposals reviewing the implications of increasing Medicare eligibility age from 65 to 67, at this time there is nothing in place to change the eligibility age from 65.
Can you get Medicare if you never worked?
Yes, it is possible to be eligible for Medicare if you have never worked but have a qualifying situation such as your spouse being qualified, having certain medical conditions, or paying an out of pocket premium for coverage.
What are the 4 things Medicare doesn't cover?
- Hearing aids
- Long-term care
- Most dental care
- Eye exams
What is the Medicare rule of 3?
Pertaining to skilled nursing facilities, patients have to have a consecutive 3-day inpatient hospital stay to have financial coverage eligibility. The 3 days do not include the day of discharge nor any pre-admission time in an emergency room or under outpatient observation. If qualified, Medicare Part A allows for patients to pay nothing during days 1-20 in a skilled nursing facility. Beginning day 21, patients are responsible for a daily coinsurance premium of $200 (in the year 2023). After 100 days, all skilled nursing costs are the patient's responsibility.
How much money can you make and still be on Medicare?
You can make are much money as you'd like and still remain on Medicare. You may have to pay additional premiums depending on your Modified Adjusted Gross Income.
Is there a penalty for not signing up for Medicare Part A at 65?
If you are entitled to Part A benefits without having to pay monthly benefits, there is no penalty for signing up late. There are Part B and Part D penalties however that can add up by 10% annually so it's best to know the rules.
Is Medicare Part D mandatory?
Technically Medical Part D is not mandatory since there is generally not a requirement to carry it. If you ever decide to get coverage in the future, however, there is a monthly premium late penalty added on in perpetuity.
Do you have concerns about Medicare and how your eligibility or enrollment may impact your financial plan? Talking to a financial advisor at Cremé Wealth can help you find the answers to your questions and equip you to make decisions based on the details of your situation. Our team of financial professionals can assist you in considering the various factors so you can make well-informed, educated choices to plan around your health.
Contact us today for a complimentary assessment.