You are about to enter retirement and apply for Medicare, and 64.5 years old is the golden age when you need to make sure a few things are in order. These are the things you need to consider depending on your employment status.
If You’re Still Employed
1. Social Security Impact
Before deciding about Medicare, you should first consider your social security. There is a penalty for having a job and collecting social security if you go over the limit. The limits vary based on your age and income earned. You can review working while collecting social security in my previous article.
2. Employer Group Insurance
An important question to ask is, does your group insurance require you to get Medicare Parts A and B? If you work for a small employer, they are permitted to require you to get Medicare when you turn 65. At that time, Medicare will become your primary health insurer. Your employer also has the option to cancel your workplace plan.
3. Health Savings Account
Do you have a health savings account (HSA) that your company or you contribute to? You can have an HSA, but you can’t contribute to it after you enroll in Medicare. That includes if you have part A. You can use the money you’ve already accumulated tax-free in the account for eligible medical expenses at any time.
4. Your Current Healthcare Costs
An important step in determining Medicare coverage while working is to determine the cost of your healthcare. Here are a few things to consider: your deductible, cost of insurance, and drug cost. Most Medicare drug plans have a coverage gap, also called the “donut hole.” This means there’s a temporary limit on what the drug plan will cover for drugs.
If You’re Unemployed/Already Retired
If you are not employed when you turn 65, you have a different set of questions to ask.
1. Social Security
Social security comes into play again. You will need to decide if you’re going to start tapping into it. This article shows you where to begin. If you choose not to take social security, then you have to determine if you can afford the quarterly payment for Medicare Part B.
2. IRMAA
The income-related monthly adjustment amount (IRMAA) sliding scale is a set of statutory percentage-based tables used to adjust Medicare Part B and Part D prescription drug coverage premiums. After looking at the scale, you can determine if you have any IRMMA costs for Medicare Part B and Part D. The higher the beneficiary’s range of modified adjusted gross income (MAGI), the higher the IRMAA.
Sometimes, you just need someone to talk you through the best option for your situation. One way to avoid any problems is to work with a competent advisor that understands your needs and your situation that can point out any concerns that you do not see or may not have thought of.
