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Medicare

Q&A: Skipping Medicare drug coverage now can mean paying more later when you do sign up

October 28, 2024 By Liz Weston

Dear Liz: I did not enroll in Part D prescription coverage when I enrolled in Medicare in 2005 because I was not taking any prescriptions at the time. When I enrolled a few years later, I was penalized $11 per month for late enrollment and I must pay this penalty until I die. What is the reasoning and logic behind this rule except to benefit the insurance companies? I’ve complained to Medicare.

Answer: You can complain until you’re blue in the face, but this is how insurance works.

Insurers — and the largest payer of healthcare services, Medicare — need a large pool of healthier people paying premiums to offset the costs incurred by the sicker ones. If only sick people bought insurance, premiums would skyrocket, making healthcare even more expensive than it already is.

Filed Under: Medicare, Q&A Tagged With: health insurance, Medicare, Medicare late enrollment penalties

Q&A: Beware of penalties that can come with delaying Medicare enrollment

September 30, 2024 By Liz Weston

Dear Liz: I have a high-deductible insurance plan from my employer and I contribute to a Health Savings Account. I understand people on Medicare can’t contribute to an HSA. If I’m still working at full retirement age, can I start my Social Security benefit but avoid enrolling in Medicare?

Answer: No. Once you start Social Security, you’re automatically enrolled in Medicare if you’re 65 or older.

If you delay Social Security and don’t plan to enroll in Medicare at 65, you’ll want to make sure your employer-provided health insurance will allow you to avoid penalties for late enrollment. These penalties, which are permanent, result in higher premiums for Part B (which covers doctor visits) and Part D (which covers prescriptions). You can avoid those penalties if your employer has 20 or more employees and your health insurance provides at least as much coverage as Medicare. Check with your company’s human resources department.

Filed Under: Medicare, Q&A, Social Security Tagged With: Medicare, Medicare late enrollment penalties, Social Security

Q&A: Spreading the wealth in health savings accounts

September 23, 2024 By Liz Weston

Dear Liz: I have a family health savings account with a qualifying high-deductible health insurance plan. The HSA will become my individual account when my youngest turns 26 and no longer qualifies for our insurance plan. My husband can’t contribute to an HSA because he’s on Medicare. I have read that if I die before him, he can use my HSA for his own medical expenses. Can I use my HSA to pay his medical expenses now, even though I can’t contribute to it on his behalf?

Answer: Yes. A spouse can use HSA funds for the qualifying medical expenses of a spouse as well as other dependents, according to Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting.

If you want to pass the funds to your husband should you die first, you should make him the designated beneficiary of the account. Otherwise, the account could become taxable at your death, as mentioned in last week’s column.

Filed Under: Health Insurance, Medicare, Q&A Tagged With: health savings account, HSA, HSAs, Medicare

Q&A: A retirement catch-22 and health savings accounts

September 23, 2024 By Liz Weston

Dear Liz: My wife and I are withdrawing an unusually large amount from our IRAs in order to make a 20% down payment on the construction of a new retirement home. This withdrawal will, unfortunately, bring our modified adjusted gross income above the limits that will cause increases in our Medicare premiums in 2026. Is there any way to avoid this increase?

Answer: You have the right to appeal an increase in your premiums, but successful appeals usually require someone to have experienced a drop in income due to retirement, a spouse’s death or divorce, for example. A one-time increase in your income — because of a large IRA withdrawal or capital gains from the sale of a home, for example — usually won’t qualify for relief.

As you know, Medicare’s income-related monthly adjusted amount (IRMAA) adds surcharges to Part B and Part D premiums when incomes exceed certain amounts. In 2024, IRMAA starts when modified adjusted gross income exceeds $103,000 for individuals or $206,000 for married couples filing jointly. There’s a two-year delay between when you report your income and when IRMAA increases your premiums.

The good news is that the increase isn’t permanent. If your income goes back to normal next year, so will your 2027 premiums.

Filed Under: Medicare, Q&A, Retirement, Retirement Savings, Taxes Tagged With: IRA withdrawals, IRMAA, Medicare

Q&A: Looking to Medicaid to pay for assisted living

September 9, 2024 By Liz Weston

Dear Liz: I am going to sell my house, pay back my reverse mortgage, spend down and go on Medicaid in order to pay for assisted living that I need. What are some good resources I can contact to help me navigate all this? I have done a lot but am still needing more help.

Answer: Medicaid, the government health insurance program for the poor, typically doesn’t cover the room and board costs of assisted living, but many states offer Medicaid waivers that pay some assisted living expenses. Even if you qualify, though, there are typically a limited number of waivers available and you may be put on a wait list.

You definitely shouldn’t sell your home or spend down your resources before consulting with an expert. You can contact the National Academy of Elder Law Attorneys (NAELA) for a referral to a lawyer who specializes in this complex area or use the American Council on Aging’s free locator tool to find a Medicaid planner.

Filed Under: Medicare, Mortgages, Q&A, Real Estate, Retirement, Social Security

Q&A: How capital gains boost Medicare premiums

March 18, 2024 By Liz Weston

Dear Liz: We are retired and living mainly on a pension, which covers our month-to-month needs. We own our house outright and are considering downsizing. When we do that, will the capital gain cause our Medicare premiums to go up two years later? If so, will it automatically go down again after one year?

Answer: A big-enough capital gain can trigger Medicare’s income-related adjustment amount, which are surcharges on your Part B and Part D premiums. As you note, there’s a two-year delay between the higher income on your tax returns and higher premiums.

If you’ve had a life-changing event — marriage, divorce, a spouse’s death or loss of income, for example — you can appeal the increase by filing form SSA-44. Otherwise, consider saving some of the home sale profits to cover your higher premiums for that one-year period.

Filed Under: Medicare, Q&A Tagged With: capital gains, home sale, IRMAA, Medicare, medicare premiums

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