Ask Liz Weston

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Health Insurance

Q&A: How Medicare, COBRA interact

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Dear Liz: You recently wrote about how Medicare coverage interacts with employer coverage. My husband will retire next year at age 65. His company has over 20 employees, so it’s considered a large company plan that won’t require him to sign up for Medicare. Is it better for him to elect family COBRA coverage for 36 months and defer Medicare coverage, since his company healthcare plan will be superior to Medicare? Can he elect Medicare coverage once COBRA terminates? Coverage matters more than costs.

Answer: He shouldn’t put off signing up for Medicare, because COBRA won’t insulate him from penalties.

The previous column mentioned that Medicare Part A, which covers hospital visits, is usually premium-free, but people generally pay premiums for Medicare Part B, which covers doctor’s visits, and Medicare Part D, which covers prescription drugs.

Failing to sign up when you’re first eligible for Part B and Part D typically means incurring permanent penalties that can be substantial. You can avoid the penalties if you’re covered by a large employer health insurance plan — but that plan must be as a result of current employment, either yours or your spouse’s. Once your husband retires, his employment is no longer current, so he should sign up for Medicare to avoid penalties.

If you or any other dependents need coverage, he may end up paying for additional insurance through COBRA on top of what he pays for Medicare. He can have both COBRA and Medicare for himself if his Medicare benefits become effective on or before the day he elects COBRA coverage. If he starts Medicare after he signs up for COBRA, his COBRA benefits would cease but coverage for you and any dependent children could be extended for up to 36 months. Another option to consider would be to cover you and any dependents using a plan from an Affordable Care Act marketplace. You may want to discuss your options with an insurance agent before deciding.

In fact, getting expert opinions is a must, because Medicare rules and health insurance in general can be so complex. Anyone nearing 65 also would be smart to discuss their individual situations with their company’s human resources department and then confirm the information with Medicare before deciding when and how to sign up.

Q&A: Medicare vs. spouse’s health plan

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Dear Liz: I am planning to retire in a few months at 65. My husband, who is five years younger, works for a corporation that provides excellent health insurance. When I sign up for Medicare, will I still be able to stay on my husband’s health insurance? Which insurance will be listed first for coverage?

Answer: The rules are different depending on whether your husband’s insurance is considered a large employer plan or a small employer plan.

If the plan covers 20 or fewer employees, his employer can boot you off the plan or make it secondary to Medicare. If the plan covers more than 20 employees, though, the employer typically can’t treat you differently from younger employees and spouses and must allow you to stay on the plan, which would remain your primary insurance with Medicare as the secondary insurer.

Medicare penalties are another issue to consider. Medicare Part A, which covers hospital visits, is usually premium-free, but people generally pay premiums for Medicare Part B, which covers doctor’s visits, and Medicare Part D, which covers prescription drugs. If you don’t sign up for Medicare Part B and Part D when you’re first eligible, you could face permanent penalties that would raise your monthly premiums for life.

These penalties don’t apply if you put off signing up for Part B and Part D because you’re covered by a large employer health insurance plan from current employment, either yours or your spouse’s. Once that employment or coverage ends, though, you’ll need to sign up for Part B and Part D promptly or the penalties kick in.

Notice the use of the words “typically,” “normally” and “generally” in the paragraphs above. Medicare’s rules and exceptions can be tricky to navigate. Talk to the benefits manager at your husband’s company so you know where you stand, and what parts of Medicare to sign up for as you turn 65.

Q&A: If long-term care insurance costs too much, you have a choice to make

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Dear Liz: We were told to buy long-term care insurance early because waiting too long would make it more expensive and perhaps unavailable. I bought mine when I was 55. At the time, it was $2,400 a year. Unfortunately, the premiums just kept going up. I am now 77, and the premium this year was $4,470. The letter informing me of this increase said that next year it will go up 6% to $4,738, and 6% again the following year to $5,022. It’s very clear to me that buying the insurance early was definitely not an advantage. The insurer will obviously keep raising the premium at will. Since I am, like most people my age, on a fixed income, the time will come when I simply cannot afford these premiums. I will then lose the insurance plus all I have paid into it all these years. People should be told that the premiums will continue to rise, and that the time may come when the cost is beyond what anyone on a fixed income can afford.

Answer: Many people are in the same unfortunate situation. They purchased policies because they thought it was the prudent thing to do, only to face the possibility of losing coverage as premiums continued to rise.

Companies that offered long-term care insurance starting in the 1980s and 1990s discovered they didn’t price the coverage accurately. Far fewer people dropped their policies than expected, while the costs of long-term care increased more than anticipated. Many insurers stopped offering the coverage, and massive premium increases were the norm for a while.

Insurers can’t raise premiums “at will,” by the way. The increases must be approved by regulators, who weigh the effects on customers against the possibility an insurer might go under and be unable to pay anyone.

The companies still selling long-term care coverage now offer less generous policies that probably won’t require huge premium increases. Still, many financial planners advise their clients who are buying coverage now to expect their premiums to increase 50% to 100% over their lifetimes.

It’s important to keep in mind that insurance is not like an investment or a savings account. You don’t buy homeowners insurance hoping your house will burn down someday so that you can get your money back. You buy it to protect your finances against catastrophic loss. So it’s not as if you received nothing in return for your long-term care premiums: You were protected against a potentially catastrophic cost that — fortunately — didn’t happen.

That doesn’t mean you were wrong to expect your premiums to remain affordable. Given your current reality, though, you’ll need to decide if you want to risk dropping coverage entirely or if reducing coverage might be an option. Many people in your situation have opted for longer waiting periods, lower inflation adjustments or a reduced benefit period to keep premiums affordable.

Q&A: How to find affordable healthcare insurance

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Dear Liz: I am 25 and work two part-time jobs, neither of which offers health insurance. Once I’m 26, I will no longer be able to remain on my parents’ policy. Do I need a full-time job to receive health benefits, or do I have other options?

Answer: You currently have other options, but you may still want to look for a full-time job that offers this important benefit.

Although a Texas judge ruled the Affordable Care Act unconstitutional, the law giving people access to health insurance remains in effect while legal challenges play out. You can start your search for coverage at www.healthcare.gov. The open enrollment period for most people has ended, but some states including California have extended the deadline to Jan. 15. In addition, you would qualify for a “special enrollment” period once you turn 26 and lose eligibility for coverage on a parent’s plan.

If the ACA does go away, health insurance may become harder to qualify for and more expensive. Group health insurance through an employer may become your best option.

Q&A: Moving for cheaper foreign healthcare can be stressful

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Dear Liz: My husband is 55 and we are hoping to retire in five years. That gives us time to clean up our outstanding debt (the house, car and credit card debt from medical bills). We have a little over $1 million saved. He was recently offered early retirement but didn’t take it because of our debt and my health problems. I have end-stage liver disease and recovered from liver cancer. I have been collecting disability for a while.

I’m doing relatively well for my condition. However, at any time my health can take a bad turn. So I was interested in what you said about living in other countries to get affordable healthcare. If we were to do that, how long would we need to live there to qualify for healthcare? Should we talk to a tax preparer and financial advisor?

Answer: Residency requirements to qualify for public healthcare vary by country, said Kathleen Peddicord, founder of the international living site Live and Invest Overseas. “In some cases it’s instant, in others it could take years,” she says.

In most countries, anyone who is employed or self-employed can instantly access the public system. Some countries allow non-workers to opt into this system by volunteering to pay into it, but there may be restrictions for those with pre-existing conditions. If you’re collecting Social Security disability, you probably have Medicare, but that coverage typically doesn’t extend abroad.

Expatriates in good health can use an international medical plan to bridge any gaps in coverage, but those policies also typically exclude preexisting conditions. You might have to settle for a more limited travel medical plan that would expire after six months and need to be renewed, she said. Given your serious health issues, that could be problematic.

Then there’s the potentially enormous stress of moving to a foreign country, adapting to a different culture and possibly learning a new language. Even in countries with excellent healthcare, finding specialists who can help you manage your condition, and who can communicate clearly with you, can be a hassle.

If you can find advisors familiar with life in the country of your choice, that could be helpful, but you’ll probably be doing a lot of research on your own. Before you decide to move, you should make at least one and preferably a few trips to the country to get a better idea of the challenges.

Q&A: The fat in your genes/jeans

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Dear Liz: In one of your recent answers, you said “avoiding obesity” was part of choosing healthier lifestyles. The problem with that statement is that a large percentage of people cannot avoid obesity, because obesity is “wired” into their genes or otherwise into their personal biological makeup. People range all over the spectrum. I personally knew a guy who would normally eat four Double Double burgers plus fries when he ate at In-N-Out Burger, and he didn’t exercise, but he was trim as a telephone pole. But guys in my family have large lumps of extra fat on their bodies, even if we don’t eat that much.

Your casual mention unfortunately reinforced the false notion that people who have obese bodies always are that way because they eat poorly or too much, while people with trim bodies are always that way because they eat wisely and exercise. That false notion just makes life harder for those of us who have obesity regardless of how we eat. I’m sure you didn’t intend to make my life more difficult at all, but that’s the effect that such casual allusions have. It would be best to stick with unassailable phrases such as “eating wisely.”

Answer: Some people definitely are blessed with faster metabolisms, and research indicates that others have a genetic predisposition to packing on weight. But obesity is largely preventable, according to the World Health Organization and other medical authorities.

The WHO recommends that individuals limit the fats and sugars they eat, increase consumption of fruit and vegetables, as well as legumes, whole grains and nuts; and engage in regular physical activity (60 minutes a day for children and 150 minutes spread through the week for adults). Programs such as Weight Watchers or 12-step groups such as Overeaters Anonymous can help provide support. You may never be skinny, but you can definitely take steps to improve your health.