By: Crystal Manning
Finding affordable medical insurance is a critical part of your retirement planning. Once you're eligible for Medicare at age 65, insurance becomes more affordable, and you cannot be denied coverage for pre-existing conditions. Despite these benefits, managing your insurance can still be complicated, and you'll need to plan carefully to make every dollar count.
In some cases, though, you may save money by delaying your enrollment in Medicare Part B. For example, if you currently have employer-sponsored group coverage - either through your or your spouse’s employment - you may delay enrollment in Part B and sign up later during the Special Enrollment Period (SEP) when you stop working or that health coverage ends (whichever happens first). This would allow you to save money on Part B monthly premiums. However, special rules may apply. For example, employer coverage for retirees or through COBRA doesn’t count as current employment, so these individuals do not qualify for a SEP to enroll in Medicare later, you may occur the 10% penalty each year. A different set of rules apply if the person has Medicare based on disability or ESRD.
If you’re becoming eligible for Medicare but you already have insurance, learn whether/how your current plan coordinates with Medicare and whether/how you can delay Medicare enrollment. There are several different kinds of health insurance.
1. Job-based insurance: Insurance offered by an employer or union for current employees. If you are covered by your or your spouse’s insurance, it may work with Medicare to cover your health care costs and may also allow you to delay Medicare enrollment.
2. Retiree insurance: Insurance plans that employers may provide to former employees who have retired. Retiree insurance always pays secondary to Medicare.
3. Federal Employee Health Benefits (FEHB): Insurance for current and former government employees and their family members. FEHB is either primary or secondary, depending on whether you are enrolled in Part B.
4. TRICARE: Insurance provided by the federal government to active duty and retired military personnel and their family members. There are many different TRICARE programs.
5. Veterans Affairs (VA) benefits: Insurance provided by the federal government to veterans. Benefits include pensions, educational stipends, and health care, among others. VA benefits do not coordinate with Medicare
Important note: if you enroll in Medicare Part A and/or B, you can no longer contribute pre-tax dollars to your HSA. This is because to contribute pre-tax dollars to an HSA you cannot have any health insurance other than a High Deductible Health Plan (HDHP). However, you may continue to withdraw money from your HSA after you enroll in Medicare to help pay for medical expenses, such as deductibles, premiums, copayments, and coinsurances. If you use the account for qualified medical expenses, its funds will continue to be tax-free. Finally, if you decide to delay enrolling in Medicare, make sure to stop contributing to your HSA at least six months before you do plan to enroll in Medicare. If you do not stop HSA contributions at least six months before Medicare enrollment, you may incur a tax penalty.
Considering the Medicare premium penalties and additional healthcare
costs you may incur if you don’t have adequate health insurance coverage, it is essential to enroll in Medicare at the right time. Avoiding those extra costs may help you better plan your health-care costs for retirement. Sometimes it’s easiest to talk with an expert. As an independent Licensed Medicare Advisor, I work to help you and not an insurance company and I am happy to address any specific questions or concerns. Contact Crystal Manning, Licensed Medicare Advisor at 412-716-4942 or email crystalmanning33@gmail.com.