June 15, 2016
by: Margie Johnson Ware, Aging and Health Specialist.
Summer has arrived, and between trips to the beach and long afternoons with the grandchildren, retirement suddenly feels closer and more desirable than ever. Is it finally time to take the plunge? No matter what your situation, there is a lot to think about before taking any next steps.
Let’s take a look at three different scenarios that may sound a lot like yours. There are many valuable lessons to be learned once you start considering retirement!
Lesson #1: Remember, you can retire and join Medicare at 65 even though full Social Security is available later. Speaking to a trustworthy advisor can help you make this decision.
Fran Bailey’s spouse is already retired, and she and her husband want to spend more time together. After reflecting on her job satisfaction and personal goals, Fran decided to retire at 65 even though her full Social Security benefits wouldn’t start until she turned 66.* By carefully using some of her Roth IRA funds, Fran and her husband would be able to get by despite the lack of new income. The IRA funds wouldn’t be taxable, and her Social Security benefit would increase by 8% in the next year, a far cry from what she could expect from the index fund.
So Fran gave her notice at work, and went to Social Security to file for Parts A & B of Medicare three months before her 65th birthday. She took the Medicare Questionnaire and found a Medicare Advantage plan that included all of her providers and gave her some valuable extra benefits, like vision and hearing coverage. She’s glad that she had the courage to give herself an extra year to “smell the roses,” even though there was so much pressure to work until her Social Security benefits kicked in.
Lesson #2: If you are 65 or older and lose your employer insurance, sign up for Medicare ASAP.
Larry Garcia wasn’t fortunate enough to be able to make his own decision to retire. The company was experiencing a steep drop in profits, and they delivered the news of his layoff on his 65th birthday. They told him not to worry about health insurance because he could get COBRA, or temporary continuation of health coverage. Larry realized that COBRA meant he would pay the entire premium, not just the share he had been responsible for as an employee. How was he going to afford that?
Larry decided to call the Medicare office and ask for advice. They told him that since he was already 65, it actually made more sense for him to sign up for Medicare A & B immediately. Even with the addition of a Medigap plan and Part D drug coverage, the total cost was much less than his COBRA premium. Additionally, COBRA is not considered the same as the employer coverage available while working. That means that if Larry had enrolled in COBRA instead of enrolling in Medicare during his Initial Enrollment Period (the 7 month period surrounding his 65th birthday) he could have faced late enrollment penalties. When in doubt, it is always best to call 1-800-MEDICARE or meet with a Medicare counselor to make sure you are getting up-to-date advice about your coverage options as an older American.
Lesson #3: Individuals with limited income (even if their income while working was higher) can often qualify for Medicare assistance programs.
Lilly Mason is exhausted. She is self-employed, working as a caregiver for five different families. Because she has health insurance coverage under the Affordable Care Act, she isn’t sure whether she really needs Medicare. Her friend John told her that Medicare is more expensive than a “Marketplace” program, and advised her to just stick with what she had. But after consulting the Medicare advisors at her local senior center, Lily discovered that there are delayed starts and penalties if she keeps her Marketplace plan once she can start Medicare. And, she was eligible for financial assistance with the Medicare Part B premium–and that Medicare would therefore be much cheaper.
So why had her friend told her not to go on Medicare? It turns out that due to her friend’s high income, the income adjustments require he pay a higher Part B premium. He didn’t talk to a Medicare advisor and didn’t know he owed penalties for waiting to join Medicare on top of his higher premium. Although John was trying to be helpful, his misguided advice could have cost Lily hundreds of dollars a month, and left her without insurance for several months.
Are you in a situation like Fran or Larry or Lilly? Seek advice from sources you can trust, and don’t always assume your employers have the most up-to-date advice. You can access free, trustworthy Medicare advice from licensed benefits advisors by taking the Medicare Questionnaireassessment, created by the nonprofit National Council on Aging. Or call your local State Health Insurance Assistance Program (SHIP) for federally-funded Medicare counseling. Remember: you can’t ask too many questions. And enjoy your retirement!
*This will be true until 2020, when the age for full benefits will increase from 66 to 67.
https://www.mymedicarematters.org/2016/06/transitioning-into-retirement-medicare-lessons/
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